Jeff Bezos loses US$7 billion in a day; no longer world's richest person

Blue Origin founder Jeff Bezos speaks after receiving the 2019 International Astronautical Federation (IAF) Excellence in Industry Award during the the 70th International Astronautical Congress at the Walter E. Washington Convention Center in Washington, DC on October 22, 2019.-AFP

By Daily Mail - October 26, 2019 @ 12:46pm

JEFF Bezos is no longer the world’s richest man – at least for the time being.

The Amazon founder was knocked off his perch by Bill Gates as a result of after-hours trading on Wall Street on Thursday.

After reporting less-than-expected third quarter earnings, Amazon’s stock nosedived by 7 per cent in after-the-bell trading, dragging down Bezos’ net worth to US$103.9 billion.

Gates, the Microsoft co-founder, is worth US$105.7 billion, according to Forbes.

Bezos would still be the richest man if he hadn't divorced wife MacKenzie earlier this year.

Bezos agreed to give MacKenzie a 4 per cent stake in Amazon – a quarter of his shares in the company – when they finalised the details of their divorce in July. The stock was then worth more than US$37 billion.

Before the divorce, Bezos' net worth reached a peak of US$150 billion in 2018.

Software pioneer Gates spent 24 years atop the list of world’s richest people, but he was overtaken by Bezos last year.

Bezos, who owns 57.6 million shares of Amazon, lost nearly US$7 billion overnight as a result of the drop in company stock price, which analysts say was caused by Amazon's push for faster delivery.

The online retailer said its third-quarter net income fell 26 per cent from a year ago, missing Wall Street expectations.

Its sales outlook for the holiday shopping season also disappointed analysts.

Amazon is moving to cut its delivery time in half to one day instead of two.

To do that, it's adding more workers in its warehouses and expanding its shipping network with more trucks, jets and package sorting facilities.

The effort is costing the company about US$1.5 billion, nearly double what it previously said it would cost.

But Amazon said the one-day shipping is attracting more customers and gets shoppers to spend more.

“It's a big investment,” Bezos said in a statement.

“And it's the right long-term decision for customers.”

The Seattle-based company reported a net income of US$2.1billion in the three months ending on Sept 30, down from US$2.9 billion a year ago.

The company, which used to report razor-thin profits, has seen its quarterly profits grow in the past two years as it expanded into fast-growing businesses, such as cloud computing and advertising.

Sales at its cloud computing business, which powers video-streaming service Netflix and other companies, rose 35 per cent from a year ago.

And revenue in its “other” category, which the company said is mostly made up of its advertising business, jumped 44 per cent.

Revenue for the quarter beat expectations, rising 24 per cent to US$70 billion.

The third quarter included Amazon's made-up sales holiday “Prime Day,” which has become one of the company's biggest shopping events of the year.

Amazon also saw a jump in headcount.

It had 750,000 worldwide employees at the end of September, up nearly 100,000 from the previous three months.

Besides adding workers in its warehouses to pack and ship boxes, the company said it's been hiring more software engineers and salespeople for its cloud business.

Amazon is the second-biggest US-based private employer, just behind rival Walmart.

For the current quarter, which includes the holiday shopping season, Amazon expects revenue between US$80 billion and US$86.5 billion.

That's below the US$87.4 billion analysts expected.

The personal life of Jeff Bezos was thrust into the spotlight with the announcement in January that he and his wife were divorcing after 25 years of marriage and the revelation by the National Enquirer that he had been having an affair with a former news anchor, Lauren Sanchez.

Jeff and MacKenzie Bezos married in 1993 and have four children. Jeff Bezos founded Amazon in their Seattle garage in 1994 and turned it into a colossus that dominates online retail. – Daily Mail
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