Amazon CEO Jeff Bezos laughs during an interview in Cupertino. (Ben Margot, AP, file)
New York – Amazon founder Jeff Bezos surpassed Bill Gates as the world’s richest person on Thursday … at least for a few hours.
Shares of the online retailer had surged as US markets opened, and climbed as much as 2.9% just before noon in New York, giving Bezos a net worth of $92.3bn. Then, with investors bracing for the Seattle-based company to report second-quarter results after the close, the shares tumbled.
Amazon fell 0.7% on the day, leaving Bezos with $89.3bn and keeping him in second place on the Bloomberg Billionaires Index. Gates, the 61-year-old Microsoft co-founder, has held the top ranking since May 2013.
Amazon dropped further in extended trading, sliding 1.9% to $1 026 at 16:37 in New York, after reporting earnings that missed estimates and forecasting a possible operating loss for the third quarter.
Bezos owns about 17% of Seattle-based Amazon, which has surged 39% this year, helping to add $23.9bn to his net worth. He started 2017 as the world’s fourth-wealthiest person and has since surpassed Inditex founder Amancio Ortega, who ranks third, and Berkshire Hathaway chairperson Warren Buffett.
Amazon forecast shows cracks in e-commerce, cloud dominance
Amazon reported a steep jump in quarterly expenses and gave a disappointing profit outlook, blunting its momentum as the e-commerce giant prepares to enter the grocery store business by buying Whole Foods Market.
The results and forecast show the world’s biggest online retailer is preparing for stepped up competition from rival Wal-Mart Stores and cloud-computing challengers Microsoft and Alphabet.
Investors have put increasing faith in CEO Jeff Bezos to keep the company growing by entering new categories such as groceries, appliances and furniture and expanding abroad. Their confidence has sent the stock up 39% this year and was unfazed by the announcement that Amazon would spend $13.7bn for Whole Foods, the company’s biggest-ever acquisition. But the support took a turn in extended trading after Thursday’s results were reported, with shares falling as much as 4.3% to $1 001.80.
Second-quarter expenses increased 28% to $37.3bn. Sales gained 25% to $38bn, the Seattle-based company said in a statement. Net income declined to $197m, or 40 cents a share, from $857m, or $1.78 a share, a year earlier. Analysts estimated profit of $1.42 a share on revenue of $37.2bn, according to data compiled by Bloomberg.
“Spending is always a concern with Amazon, but investors eventually give Amazon a pass because Amazon invests in growth opportunities,” said Victor Anthony, an analyst at Aegis Capital Corp.
The company is expanding into India and Australia, speeding up delivery times to as little as an hour on select products, adding new skills and devices for its voice-activated Alexa platform and producing original movies and shows.
Amazon dominates e-commerce in the US with its $99-a-year Amazon Prime subscription, which includes delivery discounts, music and video streaming and is intended to keep shoppers engaged with the website.
The company had 85 million Prime subscribers in the US as of June 30, an increase of 35% from a year earlier, according to Consumer Intelligence Research Partners. Amazon’s subscription services revenue, which is mostly from Prime memberships, increased 51% to $2.17bn in the quarter - faster than 49% in the previous quarter.
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