Source: Securities Times.
Author: Chen Ming.

On Friday local time, the three major US stock indexes collectively rose. As of the close, the Dow rose by 0.69%, the Nasdaq rose by 0.80%, and the S&P rose by 0.41%. Among them, most technology stocks rose, with the e-commerce giant $Amazon (AMZN.US)$ rising more than 6%, with a single-day market cap increase of $121.2 billion, equivalent to approximately 860 billion yuan in RMB. The company had previously disclosed an earnings report that exceeded expectations, prompting several investment banks to subsequently raise its target price.

However, just as Amazon's performance exceeded expectations and the stock price soared, Amazon founder Bezos plans to reduce his holdings to cash in. On Friday local time, a regulatory filing showed that Bezos planned to sell approximately 16.35 million shares of Amazon stock, expecting to cash in over $3 billion. Amazon fell by 0.44% after the U.S. stock market closed that day.

Bezos plans to cash in

On November 1st local time, a regulatory filing from the exchange showed that Amazon founder Bezos planned to sell approximately 16.35 million shares of Amazon stock, expecting to cash in over $3 billion.

In July this year, Bezos had already applied to further sell 25 million shares of stock, which at the time's price could cash in $5 billion; in February, Bezos cashed in about $8.5 billion over nine trading days.

Bezos' latest stock sale plan comes as Amazon's stock price surges. On Friday, Amazon's stock price rose by 6.19%, with a one-day market cap increase of $121.2 billion. Bezos' wealth is mainly tied to Amazon's stock, and with the company's stock price soaring, Bezos' fortune is also rising. The latest data shows Bezos' fortune has increased to $215 billion, surpassing Oracle's co-founder and CTO Larry Ellison, becoming the world's second richest person on Forbes' real-time billionaire ranking, second only to Tesla CEO Musk.

Of note, Bezos made headlines last week by deciding to end The Washington Post's tradition of supporting presidential candidates. On October 25, The Washington Post suddenly announced it would no longer 'endorse' a presidential candidate and retracted an editorial supporting Harris. This sudden change quickly caused a seismic shift at The Washington Post: within just 3 days, over 0.2 million readers unsubscribed, accounting for about 8% of the paid customer base, with the number of cancellations still on the rise. Since the incident, the editorial board of The Washington Post has been in turmoil, with 13 columnists jointly submitting a letter, calling this decision a 'terrible mistake'. Editorial page editor Shipley argued with Bezos, but to no avail.

On October 28, Bezos once again emphasized the 'correctness' and 'principles' of withdrawing the decision in a 'Message to Employees', stating that the fundamental reason for making this decision is that the media is losing credibility. Endorsing presidential candidates in the media can lead to public bias, does not help the election itself, and may even backfire.

However, this statement seems to have failed to change the public opinion. On October 29, the Associated Press cited critics as saying that Bezos' actions were nothing more than to protect his own business interests and to fear 'retaliation' from Trump if he were to be re-elected. It is understood that Bezos and Trump have a long-standing feud. The Washington Post has not only extensively covered negative news about Trump and political allies, but its editorial department has long referred to him as a 'threat to American democracy'. Trump accused Amazon of 'tax evasion' and had halted a billion-dollar cloud computing contract with the Department of Defense; he also denounced The Washington Post's reports as 'fake news'. During the recent presidential election, Trump loudly proclaimed that he would seek 'revenge' against media outlets that were unfavorable to him if he won.

Amazon's performance exceeded expectations.

After the U.S. stock market closed on Thursday, Amazon released a quarterly report that exceeded expectations. The data shows that in the third quarter, Amazon's net sales were $158.9 billion, an 11% year-on-year increase, exceeding the market's expected $157.29 billion; operating profit was $17.4 billion, a more than 55% year-on-year increase, far exceeding the market's expected $14.75 billion and the upper limit of the company's guidance of $15 billion. The operating margin is about 11%, an increase of 3.2 percentage points year-on-year, surpassing the market's expected 9.34%.

Gil Luria, the technology research director at DA Davidson, pointed out that the most notable aspect of Amazon's profitability was the unexpected increase in profit margins. Investors had been concerned about whether the retail business could maintain its profit margins, but Amazon managed to increase its profit margins. The operating margin for international operations rose from 0.9% in the second quarter to 3.6% in the third quarter, while the operating margin for North American operations rose from 5.6% in the previous quarter to 5.9%.

Amazon's cloud computing business performed exceptionally well. AWS's cloud business generated sales of $27.45 billion in the third quarter, a 19% year-on-year increase to meet market expectations, accelerating from the nearly 17% increase in the first quarter and the 12% increase in the third quarter of last year. AWS's operating profit was $10.4 billion, a 49% increase from the same period last year's $7 billion, also surpassing analysts' expectations of $9.12 billion, accounting for nearly 60% of the company's operating profit.

Although Amazon has not disclosed its revenue from generative AI, CEO Andy Jassy revealed that it has become an internal business of AWS with revenues in the billions of dollars and continues to grow at a triple-digit rate year-on-year. The growth of AWS cloud computing business has shown investors the strong demand for generative AI in the market.

Amazon has also made progress in its advertising business, with ad sales in the third quarter increasing by 19% to $14.3 billion, slightly higher than expectations. This growth is attributed to Amazon's ad placements on physical store shopping carts and advertising revenue on its Prime Video streaming service.

Amazon expects revenue in the fourth quarter of this year to be between $181.5 billion and $188.5 billion, roughly in line with analysts' expectations of $186.36 billion; fourth-quarter operating profit is expected to be between $16 billion and $20 billion, also roughly in line with Wall Street's previous estimate of $17.49 billion.

CFRA Senior Stock Research Analyst Arun Sundaram stated, "The factors needed for Amazon's stock price increase are already in place."

After the financial report was released, Wall Street investment banks have raised Amazon's target price. Among them, Bank of America raised Amazon's target price from $210 to $230; Oppenheimer raised Amazon's target price from $220 to $230; Bernstein raised Amazon's target price from $225 to $235; Rosenblatt Securities raised Amazon's target price from $221 to $236; Jefferies Financial raised Amazon's target price from $225 to $235; Wedbush raised Amazon's target price from $225 to $250.

Editor/rice