Easy come, easy go: Amazon’s Jeff Bezos was the world’s richest man for just a few hours
ABC’s Wide World of Sports used to say, ‘The thrill of victory, and the agony of defeat’ in their programming and perhaps that is what Amazon’s CEO Jeff Bezos felt earlier today when his rising stock value suddenly made him the richest man in the world (according to Forbes), only to have him fall back down to second place again after the company’s failed earnings report showed the markets just how much of a bubble it and all the FANG stocks are in.
Jeff Bezos enjoyed the title of world’s richest man for several hours, before he had to relinquish it back to Bill Gates after AMZN stock dumped after hours when the company reported Q2 net income of $197 million, or $0.40 per diluted share, down 77% from $857 million, or $1.78 in Q2 2016. This was on revenue of $37.955 billion, up 25% from the $30.4 billion a year ago, and above both the company’s own expectations of $35.25-$37.75BN and consensus estimates of $37.18 billion. The company also reported operating margin of 1.7%, down from 2.8% last quarter and well below expectations.
Where the market was especially focused, and perhaps disappointed, is that the closely followed AWS segment reported net sales of $$4.1 billion, an increase of 42% Y/Y and in line with expectations, however operating income of $916 million missed expectations of a $1 billion print, and was just above last quarter’s print of $890 million. Concerning was the decline in margin, which dipped to 22.3% from 24.3% last quarter as a result of a 15% increase in expenses, likely due due to Amazon’s investment in data center infrastructure. The highly profitable division is facing tougher competition from both Microsoft and Google, prompting some concerns about whether the growth can continue on pace, especially amid price wars. –¬†Zerohedge
As of today, shares of Amazon stock are around $1046 per share, but at a P/E ratio of 197. ¬†And when you compare that to a much more profitable tech company like Apple, you can see why we insinuate that the stock’s value is not even close to being valued at 197 years worth of future earnings.
While the Forbes list of the richest individuals in the world only reports those who’s wealth is easily accessible through public records, it is fascinating to see how a company that produces nothing, and relies on other businesses to sell through their portal can be valued up with the greatest companies active today. ¬†But when Wall Street has access to unlimited cash, and is seeking any sort of yield no matter the cost or risk, then Jeff Bezos is simply the recipient of a market gone wild, and will probably see his wealth rank pop up and down a number of times before he either stays on top, or falls when investors decide its time to bail.
Kenneth Schortgen Jr¬†is¬†a writer for¬†The Daily Economist,¬†Secretsofthefed.com,¬†Roguemoney.net, and¬†Viral Liberty, and hosts¬†the popular¬†youtube podcast¬†on Mondays, Wednesdays and Fridays.¬†Ken can also¬†be heard Wednesday afternoons giving an weekly economic report on the¬†Angel Clark radio show.