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Why Amazon Stock Bounced Back This Morning

Motley Fool - Wed Nov 22, 2023

Shares of Amazon(NASDAQ: AMZN) gave up 1.5% of their value on Tuesday, but are getting all those losses back -- and more -- on Wednesday morning, rising 2.1% through 10:45 a.m. ET.

The e-commerce giant initially stumbled on reports that company founder Jeff Bezos had gifted some 1.6 million Amazon shares (worth nearly $240 million) to charity, and might be preparing to sell between 8 million and 10 million more shares in the near future -- more than $1 billion in stock sales.

And here's what you might not know: The rumors are probably true. Jeff Bezos probably is preparing (at least) to sell $1 billion worth of Amazon stock. In fact, he might be preparing to sell quite a bit more than that.

Jeff Bezos and Blue Origin

Jeff Bezos isn't just "the guy who founded Amazon.com." He's also the guy who founded space company Blue Origin. And while not many investors know this yet, Blue Origin is currently in the process of bidding to buy a second space company: the joint venture between Boeing and Lockheed Martin that is known as United Launch Alliance.

No one knows if Blue Origin will win the bid. But if Bezos does win, I've calculated that the purchase price for United Launch Alliance probably ranges from $1.2 billion to $7.2 billion, with a likely end cost of about $5.2 billion.

What you may also not know is that Blue Origin gets much of its financing from Bezos personally, who says he sells about $1 billion every year to generate cash that he then invests in Blue Origin.

Jeff Bezos and Amazon.com

Make careful note of those numbers. Bezos sells $1 billion worth of Amazon stock a year, and Bezos is rumored to be getting ready to sell... $1 billion worth of Amazon stock.

This rumor is therefore probably true.

What's more, if Bezos believes that Blue Origin is in a position to win its bid for United Launch Alliance, he may feel the need to sell a whole lot more Amazon stock to prepare to pay for that bid. If you're an investor in Amazon.com, therefore, and were worried when the stock price got hit on rumors of a $1 billion stock sale -- consider what might happen if Bezos is reported to be selling five times as much stock.

All that being said, it's also worth remembering the point my fellow Fool Danny Vena made yesterday. To wit: "Bezos still owns more than 988 million shares of Amazon stock worth more than $144 billion [and] the vast majority of Bezos' wealth is still tied up in the e-commerce behemoth he founded."

The simple fact of the matter is that Bezos can sell $1 billion of Amazon stock, $5 billion of Amazon stock, or even $10 billion of Amazon stock. None of this will mean he's uninterested in Amazon or uncommitted to the company he founded. Jeff Bezos' faith in Amazon, to me, looks unshaken.

Bear that in mind.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon. The Motley Fool recommends Lockheed Martin. The Motley Fool has a disclosure policy.

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