Amazon (NASDAQ:AMZN) is an e-commerce and cloud-computing juggernaut, and the share price fully reflects this. Amazon stock fails to reflect the company’s weak areas. Some Amazon investors wrongly perceive the company as invincible, which is dangerous.
To provide a couple of examples, Amazon’s ultra-ambitious vision for Alexa didn’t necessarily pan out, and the Amazon Fresh grocery-store venture wasn’t a big success. And now, it looks like Amazon’s founder is taking some chips off the proverbial table, which isn’t a bad idea at all.
Bezos Unloads the Boat
Jeff Bezos, mega-billionaire and Amazon’s founder and executive chair, plans to divest roughly $5 billion worth of Amazon stock. We’re talking about a supersized sale of 25 million shares, so this is big news.
Bezos already sold around $8.5 billion worth of Amazon shares in February. Assuming he sells $5 billion more, then the total share dump would be $13.5 billion.
Granted, Bezos would still have nearly 912 million Amazon stock shares even after those divestments. This would equate to an approximately 8.8% stake in Amazon. So, it’s not as if the founder has completely given up on Amazon.
I will not speculate about whether Bezos just wants to raise cash to buy the Seattle Seahawks. Rather, I’ll only postulate that Bezos may have taken profits after a breathtaking Amazon share-price rally in 2023 and 2024 so far.
If that’s his rationale, it’s perfectly reasonable since stocks don’t just go up forever without any corrective moves.
An Amazon Product Fails
Again, I want to emphasize that Amazon is capable of failing. In a recent example, discontinued production of the company’s security robot, called Astro for Business.
Making the failure even worse, Amazon is ending support for these business robots soon. According to GlobalData, “Amazon has informed its customers that these robots will no longer be operational starting from 25 September 2024.”
This is undoubtedly disappointing and frustrating for businesses that shelled out $2,349.99 for the Astro for Business robot.
Meanwhile, Amazon might not exactly be “failing” in the generative artificial intelligence chatbot race, but the company is definitely not a first mover in this field. It feels like Amazon is desperately trying to play catch-up at this point.
First, Amazon rolled out its Rufus gen-AI shopping-assistant chatbot. This chatbot has received mixed reviews and certainly doesn’t have the widespread name recognition that OpenAI’s ChatGPT has.
Also, Amazon made Amazon Q generally available earlier this year. Amazon Q is basically a gen-AI chatbot assistant for developers/coders. Only time will tell whether this product gains meaningful traction.
The same could be said about Metis, which is the code name for Amazon’s project to build a gen-AI chatbot for consumers.
Metis is unquestionably meant to compete with ChatGPT, and that’s easier said than done. One source stated that Metis “should be able to share the latest stock prices,” which sounds like the humblest of humble brags.
Take Partial Profits on Amazon Stock
For whatever reason, Bezos lightened his load of Amazon shares. Does he know something about Amazon’s future that the rest of us don’t? Or, is Bezos simply taking profits after a massive share-price rally?
We’ll probably never know the answer to those questions. That’s fine, as it still makes perfect sense to take partial profits on Amazon stock. Just as importantly, overeager investors should acknowledge that Amazon isn’t infallible and that big companies can make big mistakes.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) and positions in the securities mentioned in this article.