Jeff Bezos To Step Down As Amazon CEO; Andy Jassy To Take Over
Share Button

Jeff Bezos To Step Down As Amazon CEO; Andy Jassy To Take Over

The company announced changing roles as it reported that revenue in the fourth quarter soared 44% to US$125.56 billion.

By Dana Mattioli
Wed, Feb 3, 2021 4:16amGrey Clock 4 min

Jeff Bezos is stepping down as chief executive of Amazon.com Inc. to become executive chairman, marking the biggest change in leadership of the tech giant since he started it in a Washington state garage more than 26 years ago.

Amazon said on Tuesday that he will be succeeded as CEO in the third quarter by Andy Jassy, Mr Bezos’s closest lieutenant and the longtime head of the company’s booming cloud-computing business.

Mr Bezos, 57 years old, is handing over the day-to-day reins, as Amazon’s core businesses of online retail and business-computing services are booming during the Covid-19 pandemic, which has shifted work and life to the internet more than ever. The company announced his changing role as it reported that revenue in the fourth quarter soared 44% to US$125.56 billion—surpassing US$100 billion for the first time in a three-month span—and profit more than doubled.

But Amazon also faces the biggest regulatory challenges in its history, with multiple federal investigations into its competitive practices and lawmakers drafting legislation that could force Amazon to restructure its business. Tension with regulators and lawmakers has directly embroiled Mr Bezos, who was called to testify in front of Congress last summer for the first time.

Mr Bezos’s leadership of Amazon has made him one of the most respected, and feared, leaders in business, as well as fantastically wealthy. He is currently neck-and-neck with his rival rocket entrepreneur, Tesla Inc. CEO Elon Musk, as the world’s wealthiest person. Forbes lists Mr Bezos’s wealth at more than $196 billion.

In an email to employees made public Tuesday, Mr Bezos said he plans to focus his energy now on new products and early initiatives as well as his outside interests. “Being the CEO of Amazon is a deep responsibility, and it’s consuming,” Mr Bezos wrote. “When you have a responsibility like that, it’s hard to put attention on anything else.”

Mr Bezos’s move makes Amazon the latest of today’s tech giants to transition leadership away from the people who started them. The co-founders of Google stepped back from their management roles at its parent Alphabet Inc. in 2019, and both Apple Inc. and Microsoft Corp. have long been run by successors to their founders.

Mr Bezos left a career on Wall Street to start Amazon.com in 1994 as a scrappy online bookseller during a time when most Americans didn’t own computers. Amazon became an against-all-odds success story that would go on to completely disrupt the bookselling industry along with nearly every other industry in its path, from logistics to advertising. The company today is America’s largest online retailer, the leading provider of cloud-computing services, a significant player in Hollywood, a competitor in bricks-and-mortar groceries through its Whole Foods subsidiary, and a growing rival to United Parcel Service Inc. and FedEx Corp. in logistics. Amazon employs nearly 1.3 million people.

The executive imbued the Seattle-based company with a “Day 1” philosophy of always maintaining an underdog startup ethos. However, in recent years, Mr Bezos has stepped back from day-to-day management of the tech giant—with a brief pause when he became more actively involved in the early days of the pandemic. Many in his inner circle describe Mr Bezos’s role over the past few years as akin to that of an executive chairman. The executive famously tries to not schedule meetings before 10 a.m. and to make all of his tough decisions before 5 p.m. Amazon employees say the billionaire is elusive, with many saying they have never spotted him on the company’s sprawling downtown Seattle campus.

In 2016, he appointed two of his top deputies to oversee management of daily operations. Jeff Wilke was named CEO of world-wide consumer at Amazon, overseeing everything from Amazon’s retail arm and warehouses to its advertising and devices business. Mr Jassy was CEO of the cloud business, called Amazon Web Services.

The appointments freed up Mr Bezos to devote time to innovations and moonshots. He took on pet projects such as Amazon’s voice assistant product, the Echo, and spent time with Amazon’s studio executives on what movies and television programs it had in the pipeline.

Mr Bezos’s tightknit group of top lieutenants at Amazon has seen its ranks thin out in the past few years. In addition to Mr Wilke’s departure at the beginning of the year, Jeff Blackburn, a 20-year veteran and member of Mr Bezos’s team of top executives, took a sabbatical in 2020. Steve Kessel, another member of Mr. Bezos’s top executives, retired from the company last year.

Beyond Amazon, Mr Bezos bought the Washington Post in 2013 and has spent a sizable chunk of his time at Blue Origin LLC, the space company he founded. While the coronavirus pandemic re-engaged Mr Bezos, as the company had to deal with unprecedented demand, he remained involved with Blue Origin’s mission. Just last week Mr Bezos posted a photo on Instagram of a “hotfire test” of a Blue Origin engine.

Mr Bezos, a father of four children, also has experienced a major transition in his personal life recently. In 2019, Mr Bezos and his wife divorced and the National Enquirer tabloid reported his affair with a former television reporter who was the wife of a Hollywood executive.

The leadership transition at Amazon will take place as it grapples with unprecedented scrutiny.

The company is currently the subject of probes from the Justice Department, the Federal Trade Commission, the European Union and other governing agencies about whether it participates in anticompetitive practices.

In October, the House Judiciary Committee’s Antitrust Subcommittee—before which Mr Bezos testified in July—concluded its 16-month investigation into the biggest U.S. tech companies. Its report accused Amazon of exerting “monopoly power” over sellers on its website and suggested legislation that could cause Amazon to exit business lines—like its private-label or devices businesses—that compete with sellers on its platform.

In response to the Congressional report, Amazon said: “All large organisations attract the attention of regulators, and we welcome that scrutiny. But large companies are not dominant by definition, and the presumption that success can only be the result of anticompetitive behaviour is simply wrong.”

On Tuesday, a member of the committee, Ken Buck (R., Colo.), tweeted Amazon’s announcement saying: “I have some questions for Mr Jassy,” indicating that the new CEO will inherit much of the regulatory scrutiny from his predecessor.



MOST POPULAR

What a quarter-million dollars gets you in the western capital.

Alexandre de Betak and his wife are focusing on their most personal project yet.

Related Stories
Money
To Find Winning Stocks, Investors Often Focus on the Laggards. They Shouldn’t.
By KEN SHREVE 12/06/2024
Money
Louis Vuitton Unveils Its Most Extravagant High-Jewellery Collection Ahead of Olympics
By LAURIE KAHLE 09/06/2024
Money
Sylvester Stallone Sells His Knockout Watch Collection, Including the Most Valuable Modern Timepiece Sold in Sotheby’s History
By ERIC GROSSMAN 08/06/2024

These stocks are getting hit for a reason. Instead, focus on stocks that show ‘relative strength.’ Here’s how.

By KEN SHREVE
Wed, Jun 12, 2024 4 min

A lot of investors get stock-picking wrong before they even get started: Instead of targeting the top-performing stocks in the market, they focus on the laggards—widely known companies that look as if they are on sale after a period of stock-price weakness.

But these weak performers usually are going down for good reasons, such as for deteriorating sales and earnings, market-share losses or mutual-fund managers who are unwinding positions.

Decades of Investor’s Business Daily research shows these aren’t the stocks that tend to become stock-market leaders. The stocks that reward investors with handsome gains for months or years are more often  already  the strongest price performers, usually because of outstanding earnings and sales growth and increasing fund ownership.

Of course, many investors already chase performance and pour money into winning stocks. So how can a discerning investor find the winning stocks that have more room to run?

Enter “relative strength”—the notion that strength begets more strength. Relative strength measures stocks’ recent performance relative to the overall market. Investing in stocks with high relative strength means going with the winners, rather than picking stocks in hopes of a rebound. Why bet on a last-place team when you can wager on the leader?

One of the easiest ways to identify the strongest price performers is with IBD’s Relative Strength Rating. Ranked on a scale of 1-99, a stock with an RS rating of 99 has outperformed 99% of all stocks based on 12-month price performance.

How to use the metric

To capitalise on relative strength, an investor’s search should be focused on stocks with RS ratings of at least 80.

But beware: While the goal is to buy stocks that are performing better than the overall market, stocks with the highest RS ratings aren’t  always  the best to buy. No doubt, some stocks extend rallies for years. But others will be too far into their price run-up and ready to start a longer-term price decline.

Thus, there is a limit to chasing performance. To avoid this pitfall, investors should focus on stocks that have strong relative strength but have seen a moderate price decline and are just coming out of weeks or months of trading within a limited range. This range will vary by stock, but IBD research shows that most good trading patterns can show declines of up to one-third.

Here, a relative strength line on a chart may be helpful for confirming an RS rating’s buy signal. Offered on some stock-charting tools, including IBD’s, the line is a way to visualise relative strength by comparing a stock’s price performance relative to the movement of the S&P 500 or other benchmark.

When the line is sloping upward, it means the stock is outperforming the benchmark. When it is sloping downward, the stock is lagging behind the benchmark. One reason the RS line is helpful is that the line can rise even when a stock price is falling, meaning its value is falling at a slower pace than the benchmark.

A case study

The value of relative strength could be seen in Google parent Alphabet in January 2020, when its RS rating was 89 before it started a 10-month run when the stock rose 64%. Meta Platforms ’ RS rating was 96 before the Facebook parent hit new highs in March 2023 and ran up 65% in four months. Abercrombie & Fitch , one of 2023’s best-performing stocks, had a 94 rating before it soared 342% in nine months starting in June 2023.

Those stocks weren’t flukes. In a study of the biggest stock-market winners from the early 1950s through 2008, the average RS rating of the best performers before they began their major price runs was 87.

To see relative strength in action, consider Nvidia . The chip stock was an established leader, having shot up 365% from its October 2022 low to its high of $504.48 in late August 2023.

But then it spent the next four months rangebound—giving up some ground, then gaining some back. Through this period, shares held between $392.30 and the August peak, declining no more than 22% from top to bottom.

On Jan. 8, Nvidia broke out of its trading range to new highs. The previous session, Nvidia’s RS rating was 97. And that week, the stock’s relative strength line hit new highs. The catalyst: Investors cheered the company’s update on its latest advancements in artificial intelligence.

Nvidia then rose 16% on Feb. 22 after the company said earnings for the January-ended quarter soared 486% year over year to $5.16 a share. Revenue more than tripled to $22.1 billion. It also significantly raised its earnings and revenue guidance for the quarter that was to end in April. In all, Nvidia climbed 89% from Jan. 5 to its March 7 close.

And the stock has continued to run up, surging past $1,000 a share in late May after the company exceeded that guidance for the April-ended quarter and delivered record revenue of $26 billion and record net profit of $14.88 billion.

Ken Shreve  is a senior markets writer at Investor’s Business Daily. Follow him on X  @IBD_KShreve  for more stock-market analysis and insights, or contact him at  ken.shreve@investors.com .