The Strategist

Analyst: Jeff Bezos’ quit will have a negative impact on Amazon shareholders

06/03/2019 - 09:29

Amazon’s shareholders will remember for a long time the day when Amazon’s CEO Jeff Bezos stops managing his brainchild. The risk that everything collapses is rather great.

Mike Mozart
Mike Mozart
Nevertheless, Bezos is quite capable of changing the course of events or at least easing the financial blow that will be inflicted on the company's investors. All he needs to do is formulate plans for his future successor more clearly. By and large, at the moment market participants are not aware of whom Bezos plans to transfer power to if he dies or decides to focus solely on charity.

“We believe that the future of Amazon without Jeff Bezos at the helm is at significant risk,” says an analyst in D.A. Davidson Tom Forte. "Despite the large number of talented individuals, many of whom have been working for Amazon for a long time, we believe that Bezos stepping down could have a very negative effect on the value of Amazon shares."

According to Forte, Bezos’s resignation will lead to a two-digit drop in the value of his company's securities. The analyst also believes that there has already been beta testing of the market reaction to the Amazon-without-Bezos situation. In early 2014, Bezos was dropped off from a cruise liner and immediately taken to hospital. Later it turned out that he had kidney stones.

Bezos, the architect of American culture, succeeded in surrounding himself with a strong team consisting of Amazon's top management. Tom Forte’s analysis shows that the average tenure of members of management within the company is 21 years.

Now it's time for Bezos to recognize experience of some members of his team and introduce two potential successors to the board. Or perhaps upgrade them to the post of co-chairs of Amazon. Warren Buffet, head of Berkshire Hathaway and shareholder of Amazon, has recently taken similar steps.

Forte notes that there are currently no Amazon executives on the board of directors. The analyst stresses that a potential successor who has gained valuable experience with the board at Amazon, while Bezos is still alive, is very important for investors.

No matter what actions Bezos will take to prepare Amazon for life after its resignation, they may still not be enough. “In our opinion, Mr. Bezos is an absolutely exceptional leader. He is simply irreplaceable,” reminds Forte.