Business

Jeff Bezos sees $20 BILLION wiped off fortune in a matter of hours

Amazon founder and chairman Jeff Bezos has seen roughly $20 billion wiped off his net worth, as the company’s stock heads for its worst day on the markets in eight years.

Shares of Amazon were down 12.6 percent at noon on Friday, to $2,527.64, after the company announced its first quarterly loss since 2015, and slowing sales growth for the first time in 21 years.

Bezos owns an 11.1 percent stake in the company, and the vast majority of his fortune consists of Amazon stock, meaning the billionaire suffered huge losses on paper as the shares tanked.

At the close of markets on Thursday, Bezos was worth about $169 billion, according to the Bloomberg Billionaires Indexand his $20 billion wipeout on Friday represented about a 12 percent decline in his fortunes.

Amazon founder and chairman Jeff Bezos has seen roughly $20 billion wiped off his net worth, as the company's stock heads for its worst day on the markets in eight years

Amazon founder and chairman Jeff Bezos has seen roughly $20 billion wiped off his net worth, as the company’s stock heads for its worst day on the markets in eight years

Shares of Amazon were down 12.59 percent at noon on Friday, to $2,527.64, after the company announced its first quarterly loss since 2015

Shares of Amazon were down 12.59 percent at noon on Friday, to $2,527.64, after the company announced its first quarterly loss since 2015

Including Friday’s losses, Bezos has lost about $40 billion from his net worth since the beginning of the year — but he remains the second wealthiest person in the world, after Elon Musk.

The losses suffered by Bezos are on paper only, meaning that they could be reversed if Amazon’s stock price rises again before he sells his shares.

The plunge in Amazon’s share price pushed the Nasdaq toward sharp monthly declines on Friday, and US markets looked set to end March with their worst monthly performance since the beginning of the COVID-19 pandemic.

On Thursday, Amazon stunned Wall Street by reporting a loss of $3.84 billion, or $7.56 a share, for the first three months of the year. A year ago, it reported a profit of $8.1 billion, or $15.79 a share, for the first quarter.

The ocean of red ink in Amazon’s report came mostly from the company’s accounting for a $7.6 billion loss in value of its stock investment in Rivian Automotive.

However, Amazon’s e-commerce business also reported an operating loss of $1.57 billion in North America and $1.28 billion internationally.

Amazon has spent billions on new warehouses to meet growing demand, but some analysts warn that it may have expanded too much, too soon

Amazon has spent billions on new warehouses to meet growing demand, but some analysts warn that it may have expanded too much, too soon

Government data shows that online retail spending declined in February and March, and Amazon is now struggling to contain costs after an explosive period of growth during the pandemic.

Amazon has had to raise wages to attract workers, nearly doubling its workforce since 2020, and is currently battling a unionization effort in New York that could send labor costs even higher.

The company has also spent billions on new warehouses to meet growing demand, but some analysts warn that it may have expanded too much, too soon.

As well, higher fuel prices are eating into consumers’ disposable income while making delivery more expensive for Amazon.

Like many others, Amazon is dealing with pressure from inflation and supply-chain issues.

Inflation-related expenses added roughly $2 billion of incremental costs when compared to last year, Amazon’s Chief Financial Officer Brian Olsavsky said, adding that the company also incurred another $4 billion in costs related to productivity loss and other inefficiencies.

Amazon has been battling an attempt to unionize at its Staten Island warehouse, where organizers are seen demonstrating on Monday above

Amazon has been battling an attempt to unionize at its Staten Island warehouse, where organizers are seen demonstrating on Monday above

‘The pandemic and subsequent war in Ukraine have brought unusual growth and challenges,’ said Amazon CEO Andy Jassy in a statement.

‘Our teams are squarely focused on improving productivity and cost efficiencies throughout our fulfillment network. We know how to do this and have done it before.’

To offset rising fuel costs and inflation, the retail giant has added a 5 percent surcharge to fees it charges third-party sellers who use its fulfillment services.

Last quarter, Amazon also hiked its annual Prime membership fee for $20 to $139 annually, its first rate hike since 2018.

Despite the fee hike, Olsavsky said millions of new Prime members have enrolled during the quarter.

‘Given the pace at which the business grew over the past few years this shift is hardly surprising,’ Neil Saunders, managing director of GlobalData Retail, told Reuters.

‘It represents more of a post-pandemic reset than catastrophic failure. Nevertheless, the slowdown raises important questions about how Amazon can restore momentum and regain its leadership position as one of the primary drivers of online growth.’

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