Jeff Bezos, the founder of Amazon.com Inc, sold 12 million shares of the company, valued at over $2 billion, on February 7 and 8, marking his first major stock sale since 2021. This move follows the announcement that Bezos intends to offload up to 50 million shares of Amazon throughout the year. The surge in Amazon’s stock price, which rose nearly 79 percent over the past year, positioned Bezos close to becoming the world’s richest person.
Bezos’ net worth increased to $199.5 billion as of February 9, according to Bloomberg’s Billionaire index, with a $22.6 billion boost this year. This trend of major stake sales is not unique to Bezos, as there has been a significant rally in tech stocks driven by changing rate expectations and hopes for earlier-than-expected rate cuts by the US Federal Reserve. Lower interest rates are favorable for tech stocks, as they diminish the appeal of lower-risk assets like treasury bonds.
Investors are optimistic about a potential recovery in corporate earnings as inflation decreases, and the Fed aims for a soft landing without triggering a recession. However, the sharp rise in the stock prices of major US tech companies has led prominent figures to capitalize on the opportunity by reducing their stakes.
Earlier this week, Mark Zuckerberg, co-founder of Facebook, sold $134 million worth of shares in Meta Platforms, the parent company of Facebook. This recent stake sale brings the total amount of shares sold by Zuckerberg since November last year to $765 million.
The sale comes amid Meta Platforms’ shares skyrocketing over 160 percent in the past year, effectively doubling investors’ wealth. This surge in share value likely prompted Zuckerberg to capitalize on the opportunity and divest a portion of his holdings in the company.In November of last year, Mark Zuckerberg’s trust and various charitable and political organizations sold 682,000 shares of Meta Platforms, valued at approximately $185 million. By the end of the year, the Facebook CEO had sold around 1.8 million shares within just two months, totaling nearly $428 million.
Meanwhile, there are rumors circulating in the market about Tesla CEO Elon Musk potentially offloading more shares of the electric vehicle company.
The flurry of stake sales by US tech giants has raised investor caution regarding the sustainability of the tech rally witnessed over the past year. Many analysts are expressing concerns about the stretched valuations of most US tech stocks, particularly what some call the “magnificent seven.” Technology stocks are generally considered riskier assets compared to treasury bonds, offering a higher premium. However, with the current rally in these stocks, the potential for further upside seems limited, leading to growing concerns over a moderation in returns.