Amazon recently released in a current report Form 8-K(1) on February 2nd, 2021, that Jeff Bezos “plans to transition to the role of Executive Chair in the third quarter of 2021” and that “Andrew R. Jassy, currently CEO Amazon Web Services, will succeed Mr. Bezos as Amazon’s Chief Executive Officer and President in the third quarter of 2021.” This was unexpected news no doubt and worth a lot of attention.
In that same report, however, the company also announced record breaking sales and a higher profitability margin amid an economically devastating pandemic.
Amazon’s sales increased 38% in 2020 and its net income increased about 84%. To give context on how exceptional this was, the S&P 500 generated around 11-12% average annual returns from 1926-2019. So in a non-pandemic year we would expect on average for profitable corporations to generate a return of about 11-12%. So an 84% increase in net income is very very high compared to the average.
On top of that the United States expected real GDP decreased by -3.5% in 2020, compared to an increase of +2.2% in 2019. This means that in 2020 there was lower total wealth available to go around in the U.S. compared to 2019. We might assume from Amazon’s earnings then that a higher percentage of total wealth in the United States went to Amazon.
On the flip side, many small business owners and the people who work for those businesses have had a tremendously tough year. In some cases losing their life’s savings and their life’s work through no fault of their own and purely as a direct result from this pandemic. It’s hard to find a data driven prediction but I am estimating that something like 30% of small businesses across the country either have or expect to have to shut their doors for good. Government intervention destroyed small businesses and funneled customers and sales towards big tech companies like Amazon.