Amazon Shareholder Letter: 3 Insights From Andy Jassy’s First Memo – TheStreet

Amazon Shareholder Letter: 3 Insights From Andy Jassy’s First Memo – TheStreet

Jeff Bezos' role as CEO may have ended in 2021, but only in 2022 have investors had the chance to read the very first shareholder letter from his successor, Andy Jassy.
Because Jassy took the reins during the COVID-19 pandemic, investors were eager to find out whether his letter would set an optimistic tone for Amazon’s  (AMZN) – Get Amazon.com, Inc. Report future.
Short answer: Although he doesn't disregard current macroeconomic woes, Jassy seems confident his work will pay off.
Figure 1: Amazon Shareholder Letter: 3 Insights From Andy Jassy’s First Memo
Courtesy GeekWire by Dan DeLong. Illustration: Reagan Allen
(Read more from Amazon Maven: Amazon Post-Earnings: What Wall Street Is Saying)
One of the main issues regarding Amazon’s investments during the pandemic was the expansion of its fulfillment capacity. According to Jassy, the company, which spent its first 25 years building a very large fulfillment network, suddenly had to double its capacity in the last 24 months to meet customer demand.
“In the early 2000s, it took us an average of 18 hours to get an item through our fulfillment centers and on the right truck for shipment. Now, it takes us two,” Jassy wrote, addressing Amazon's internal motto that “faster is always better.”
Amazon’s properties and equipment value grew from $77,779 in the first quarter (Q1) of 2020 to $168,468 in Q1 2022. But profitability hasn't followed this pattern. The company has reported its first loss since 2015. As inflation ramps up, Amazon may see lower customer demand but higher infrastructure maintenance costs.
Regarding the safety of Amazon workers, Jassy highlighted that the company's injury rate was higher than its warehouse peers — 6.4 versus 5.5 — but lower than its courier and delivery peers — 7.6 versus 9.1.
The CEO remarked that Amazon has much to improve, but he believes the company’s efforts so far might also be underappreciated. “Our injury rates are sometimes misunderstood,” he wrote. Amazon is “about average relative to peers, but we don’t seek to be average. We want to be the best in class.”
Despite macroeconomic headwinds, Motley Fool’s Jason Moser believes investors can rest easy, because there is no better professional to assume Amazon’s reins than Andy Jassy.
“Anytime you replace a long-standing CEO and founder CEO like that, there are going to be big questions as to whether you got the right person for the job, and I think just judging by this letter, and judging by the interviews I've seen with Mr. Jassy through the months leading up to the letter. It just to me, it feels they've got the right person for this job,” he said.
(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting The Amazon Maven)
Equity research contributor for DM Martins Research, covering Amazon and the retail space at large. Economics and accounting background from the University of Sao Paulo, one of the top finance universities in Brazil.

source


Leave a Reply

Your email address will not be published.