Amazon posted a huge earnings beat in its fourth-quarter earnings, so what drives the man behind the trillion-dollar e-commerce giant?
Feb. 6, 2020
Jeff Bezos is currently the richest person in the world, even after he lost $10 billion in one year mainly due to separating from his wife, MacKenzie Bezos. The 56-year-old has an estimated worth of $115 billion and is the creator and Chief Executive Officer of global e-commerce giant, Amazon.com (NASDAQ: AMZN). Bezos started the company in 1994 from his garage in Seattle and still owns a 12% stake in the successful business.
How did he create Amazon?
Bezos studied computer science at Princeton University and turned down job offers from companies including Intel (NASDAQ: INTC) and Bell Labs. Instead, he joined a start-up company called Fitel, which he soon quit. He took a job at the hedge fund D.E Shaw and was named Vice President in just four years.
The year Bezos decided to launch Amazon, he read that the world wide web had grown by 2,300% in one year and decided to take advantage of it. That he did – he made a list of 20 products that he could sell online and started with books. In the initial month of Amazon’s launch, books were sold to people in 45 different countries and in 1997 the online retailer went to the market with an IPO of $18 per share.
Amazon survived the dot-com crash, is one of the few start-ups that wasn’t completely wiped out. It has since grown into a well-known name that offers streaming, music, groceries, payment solutions, e-commerce and much more. Amazon’s acquisitions include Twitch, Whole Foods Market, Ring, and IMDb.
Amazon and the antitrust investigation
Not only did Jeff Bezos recently go through a divorce that saw him keep three-quarters of his stake in the company, but he is facing another huge problem with a number of calls from both Republicans and Democrats for stricter regulation of the company and a possible antitrust investigation.
Amazon is currently enmeshed in a legal battle against the United States following the Trump administration passing over Amazon Web Services for a $10 billion cloud-computing contract called JEDI, which was awarded to Microsoft (NASDAQ: MSFT) last year. President Trump also singled out the Amazon CEO on Twitter, claiming that the U.S Postal Service was losing money on Amazon e-commerce deliveries and ordered a review of the USPS’s finances.
What were Amazon’s fourth-quarter results?
The online retail giant recently announced a 21% growth in revenue to $87.44 billion for its fourth quarter. This indicates Amazon’s faster shipping time is leading to an increase in purchases. The company also hinted they are on a positive track for the first quarter, saying it expects to report revenue between $69 billion and $73 billion. In the latest earnings report, CEO Jeff Bezos said “more people joined Prime this quarter than ever before” and that the company now has over 150 million paid Prime members.
Despite Amazon’s increasing investments, the company’s net income rebounded in the latest earnings report — growing by 8% year over year to $3.27 billion. This comes after Amazon’s net income dropped by 36% in the third quarter due to costs related to one-day delivery. Its subscription services rose 32% on the previous year at $5.24 billion. Meanwhile, Amazon’s cloud business reported $9.5 billion in sales, up by 34% year-on-year. Amazon’s “other” category, which comprises mainly of its advertising business, generated $4.8 billion in revenue for the quarter, a huge 41% increase from last year. Lastly, the company’s physical store sales, which include Whole Foods, experienced a decline of 1% over the year to $4.36 billion.
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Written by Alsha Coppolina