Amazon (AMZN 1.66%) founder and former CEO Jeff Bezos recently adopted a plan that would allow him to sell as much as 25 million shares of Amazon, in what would amount to nearly $4.75 billion, based on Amazon's stock price at the close of trading on May 2.
To be clear, selling stock does not necessarily mean that someone is bearish, because insiders often sell stock if they need the money for a purchase. However, Bezos could very well be selling because he thinks Amazon's stock -- or the entire market -- is simply overvalued or facing an uphill battle. As the founder of one of the largest tech conglomerates in the world, Bezos likely has better insights into market forces than most.
The move also comes after Berkshire Hathaway CEO Warren Buffett stockpiled cash and JPMorgan Chase's CEO Jamie Dimon sold hundreds of millions of dollars worth of JPMorgan's stock in February, leading some to believe that both CEOs were trying to speak to the market. Did Bezos just fire off a similar warning shot to Wall Street?
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Bezos has signaled before
Since founding the company and taking it public, Bezos has sold a lot of stock, about $30 billion worth, a significant amount of which he has used to fund other businesses like his rocket ship company Blue Origin.
This history could suggest that Bezos' recent plan is not saying anything negative -- he just may want the capital. But in 2023, Bezos interestingly purchased a single share of Amazon stock for about $114. Many speculated he was trolling or having fun, but since then, shares of Amazon have rocketed higher. It's important to note that investors view insider buying as a clearly bullish signal, while selling is not always bearish.
Still, it's a unique time for Bezos to adopt this plan, given what's happening with tariffs and global trade and how that might impact Amazon, which sources a significant number of its products from China. Amazon also recently reported earnings that weren't necessarily bad but failed to excite investors in the same way as companies like Microsoft, which grew its cloud revenue from Azure by 35% year over year. Meanwhile, Amazon Web Services revenue in the quarter grew 17% year over year but came in slightly below Wall Street analysts.
Despite Amazon's potential exposure to tariffs, CEO Andy Jassy seemed confident on the company's earnings call that Amazon could handle whatever comes its way. "Given our really broad selection, low pricing, and speedy delivery, we have emerged from these uncertain eras with more relative market segment share than we started and better set up for the future," he said. "I'm optimistic this could happen again."
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What to make of Bezos' selling
No one can say for sure what's behind Bezos' plan to sell up to $4.75 billion of stock. While no longer CEO, Bezos is still executive chairman of Amazon and actively involved in the company, so I doubt he's too bearish. It's also hard to imagine that Amazon won't find a way to adapt if high tariffs on China stay in place.
But even after the sell-off this year, Amazon's stock is still up a whopping 86% since May of 2023. The odds of a recession in the U.S. are certainly much higher than they have been in recent years, and a recession would certainly cut into consumer demand. Additionally, investors have questions about artificial intelligence demand, which has been a big driver for stocks like Amazon. Few doubt AI's future, but game-changing technology doesn't always work in a straight line -- just look at the early days of the internet. Bezos simply might be taking some chips off the table after what's been an extraordinarily good few years.
Ultimately, I'm not convinced Bezos is firing off a warning shot to Wall Street. He might see trouble in the future, but I think even the greats like Buffett would tell you that nobody can predict what the market will do in the near term.
