MarketWatch First Take: Andy Jassy is finally buying back Amazon stock, after Jeff Bezos missed out on some deals
On Feb. 10, 2016, Amazon.com Inc. shares were in a bear market when the company announced it would buy back $5 billion of its own shares for the first time in four years. The stock increased that day, and the next four sessions.
Chief Executive Jeff Bezos, though, never bought back any shares as the stock price topped $1,000 by the end of 2017 and never looked back. Not when Amazon stock fell into its next bear market in 2018, nor when shares dove in February 2020, before everyone realized that Amazon was built for a pandemic. (We know, because MarketWatch’s Tomi Kilgore was watching the whole time).
But when Amazon fell into a bear market again this January, Amazon had a different chief executive. Andy Jassy finally began exercising the $5 billion repurchase authorization in January, with approval from his board, which is still chaired by Bezos.
On Wednesday, Amazon disclosed that it has spent $2.12 billion on its own shares so far this year, and must like how it is going: The board ripped up the $5 billion authorization before it was half spent and replaced it with a $10 billion fund, with no expiration date. They also will ask shareholders for a stock split, another move that Bezos avoided for decades after the dot-com boom.
Full story: Amazon to split stock after gains of more than 4,500%
Bezos spent the money other companies would have funneled to shareholders on growing Amazon’s operations to a gigantic scale — adding warehouses, fulfillment centers and data centers while hiring more than a million workers since the end of 2017. The machine he created turned profitable quickly in a pandemic that kept people home: Amazon had collected total profit in its history of $29.6 billion through the end of 2019, but has racked up $54.7 billion in earnings since the beginning of 2020.
Read more: $1.4 trillion? Big Tech’s pandemic year produces mind-boggling financial results
Bezos left as a lot more profit was coming in, and also left behind a share count that had increased by nearly 55 million, roughly 8.3%, through the decade of repurchasing inaction. Many of those shares went to employees — Amazon has paid out nearly $29 billion in stock compensation over the past three years, according to its annual filing.
Amazon mentioned its employees in a statement on the split, saying “This split would give our employees more flexibility in how they manage their equity in Amazon and make the share price more accessible for people looking to invest in the company.”
Those employees and other investors who keep the shares will likely benefit from more share repurchases to manage an inflated share count, which will explode 20 times higher if the split is approved. That is, of course, if Jassy continues to buck the trend of his predecessor, who is still sitting at the biggest chair in the boardroom.