Jeff Bezos’ surprise move to step down as chief executive of Amazon.com Inc quashed Wall Street optimism about bumper quarterly results, but analysts were upbeat on the promotion of its cloud computing head to the top job.
Andy Jassy, 53, has long been considered a strong contender for the top job since Amazon.com Inc created two CEO roles in 2016 reporting to Bezos, the other held by recently retired consumer CEO Jeff Wilke.
However, few were expecting Bezos to step down when the company on Tuesday reported quarterly sales above $100 billion for the first time, delivering goods and gaining more cloud customers during the coronavirus pandemic.
“The timing of the announcement comes as a surprise, the appointment of Jassy is not surprising,” D.A. Davidson analyst Tom Forte said.
“But, will not be surprised if Amazon stock is under pressure once Jassy takes over, given the market’s fondness for Bezos.”
Shares of the e-commerce giant, which gained about 76% in 2020, were up marginally on Wednesday morning at $3,404. They have risen 8% since mid-January in the run-up to the results.
“The upside to the stock price is limited given the performance into the numbers and given what’s coming in the next 3-6 months – the vaccine rollouts,” said Keith Temperton, an equity sales trader at Forte Securities.
“Amazon model might be seen as starting to get a little bit expensive, given that people might start thinking about actually leaving their houses.”
At least 17 brokerages raised their price target on Amazon’s stock and 46 brokerages have a “buy” or higher rating, according to data from Refinitiv Eikon.
Jassy joined Amazon in 1997 after Harvard Business School, founding Amazon Web Services, known as AWS, and growing it to a cloud platform used by millions of customers.
Analysts said Bezos, now among the world’s richest men who started Amazon as an internet bookseller in a garage 27 years ago, had already stepped back from much of the company’s day-to-day operations and Jassy’s leadership has its benefits.
“Naming Andy Jassy CEO and Amazon’s pivot to a services company will definitely take some of the heat away from the antitrust probe and decrease the likelihood of it,” Forte said.
J.P.Morgan analyst Doug Anmuth dismissed concerns around Jassy’s lack of experience in retail, saying that he would continue Bezos’ same core values and beliefs, given similar operating cultures between the consumer and AWS businesses.