Please ensure Javascript is enabled for purposes of website accessibility

Jeff Bezos Is Stepping Back: Where Amazon Stock Goes From Here

By Jeremy Bowman - Updated Feb 5, 2021 at 1:32PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

He leaves the company in great shape, but his departure will test the strength of the culture he created..

Jeff Bezos, the founder and CEO of Amazon (AMZN -7.16%), is arguably the most influential business leader of his era. Bezos has famously brought Amazon from a scrappy start-up selling books online to a global tech behemoth with dominant positions in e-commerce and cloud computing, with a track record of invention that may be unrivaled in the tech world. 

The company announced Bezos' upcoming change of position away from CEO and into executive chairman in its fourth-quarter earnings report Tuesday after the bell, stunning the business world. At 57, Bezos is still far from retirement age, and there had been no sign he would step down from the CEO job.

But perhaps more surprising than his decision to move on was investors' reaction to the news. Ordinarily, when a much-admired chief passes on the reins, the stock flops, especially when it's a surprise, but Amazon stock was actually trading higher in the after-hours session, closing up 0.3%. The quarterly report included a huge earnings beat, but the Bezos news clearly overshadows any round of quarterly results.

Let's dig in a little deeper to see what this news means for the company.

Amazon CEO Jeff Bezos

Jeff Bezos. Image source: Amazon.

Bezos says bye-bye

Bezos isn't leaving entirely. In the third quarter, he'll transition to executive chairman, and Andy Jassy, the current CEO of Amazon Web Services, will take over the top spot. In a letter to employees, Bezos said:

Being the CEO of Amazon is a deep responsibility, and it's consuming. When you have a responsibility like that, it's hard to put attention on anything else. As Exec Chair I will stay engaged in important Amazon initiatives but also have the time and energy I need to focus on the Day 1 Fund, the Bezos Earth Fund, Blue Origin, The Washington Post, and my other passions. I've never had more energy, and this isn't about retiring. I'm super passionate about the impact I think these organizations can have.

Bezos has previously explained his decision to start Amazon as part of a process he called Regret Minimization Framework. He knew that even if Amazon failed, he wouldn't regret the decision when he was 80, but he would regret not trying.

I suspect Bezos is thinking similarly about moving on from the company he founded. He only has so many working years left in his career, and has other interests he wants to devote his time to, including spaceflight company Blue Origin and The Washington Post, two other businesses he owns.

Amazon is one of the most valuable companies in the world; it just capped off a year with nearly $400 billion in revenue, and it's much more profitable than what anyone would have imagined just a few years ago. In many ways, it makes sense that Bezos is ready to move on.

What it means for investors

CEO transitions, especially when they're among the most successful leaders in business, don't always go smoothly. General Electric stock flailed after Jack Welch left, as did Microsoft stock following Bill Gates' departure, and Starbucks stock after Howard Schultz quit the first time. In fact, Starbucks was so poorly managed that Schultz returned to successfully rescue the brand before stepping down again in 2017. 

Bezos leaves Amazon with a unique culture formed in his image, one that values invention and hard work, and puts the Day 1 mentality first, meaning the company still operates with the spirit of a start-up even though it's one of the biggest companies in the world.

He also gave a full-throated endorsement to Jassy, saying: "Andy is well known inside the company and has been at Amazon almost as long as I have. He will be an outstanding leader, and he has my full confidence."

A number of news outlets have also reported that the transition has been in the works for some time, with Bezos focusing on higher-level projects both inside and outside of Amazon for a while.

He leaves the company in outstanding shape, but his departure will be the biggest test yet of the culture he's built at Amazon. The tech giant enjoys a wealth of competitive advantages such as the Prime loyalty program and its reputation for customer satisfaction, which should drive the company's growth over the coming years.

But the tech industry changes fast, and Amazon faces an ever-shifting array of competitors. There's little reason to worry about the stock for now, but keep an eye on Jassy's tone and his first moves when he takes over this summer. While he's well prepared, Bezos' record clearly sets the bar high.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Amazon.com, Inc. Stock Quote
Amazon.com, Inc.
AMZN
$2,142.25 (-7.16%) $-165.12

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
349%
 
S&P 500 Returns
122%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/18/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.