Amazon founder Jeff Bezos has beaten Warren Buffett into fourth place on the world rich list, taking third place from the chairman and chief executive of Berkshire Hathaway.
The founder and chief executive of Amazon.com has become the world’s third richest person on the back of Amazon’s fastest surge in sales in four years and its third consecutive quarter of record-setting profits.
Bezos' fortune stood at $65.3 billion, compared with Buffett's $64.9 billion, as markets closed in the US yesterday. Microsoft’s Bill Gates remained the world's richest person, at $77.7 billion, while Amancio Ortega, who founded the Zara clothing chain's owner Inditex SA, was second at $72.7 billion. Facebook co-founder and chief executive Mark Zuckerberg was fifth, at $54 billion.
Bezos, 52, owns almost 18% of Amazon. Its stock has risen by roughly 50% since February, as the online retailer continued to disrupt retailing with more people taking to the web to shop.
Amazon’s heavy investments in services such as Prime membership and Amazon Web Services have held back profits for years, but these are now finally paying off.
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Revenues rose to $30.4bn in the quarter, a year-on-year increase of 31% that was the company’s fastest growth rate in more than four years and exceeded analysts’ predictions of $29.6bn in revenue. Earnings per share were $1.78, up from 19 cents last year.
Amazon said profits would fall during the next quarter, as it plans to increase investment in distribution warehouses and in producing original video content. Amazon plans to double its spending on original video content in the second half of this year, compared to last year. The company will also open 18 large warehouses this quarter, compared to six last year.
CFO Brian Olsavsky said: “We are investing in many elements of the Prime flywheel, investing in Amazon Web Services, investing in India, and investing in the Echo and Alexa platform.”
Amazon forecast revenues of between $31bn and $33.5bn for the current quarter, which would imply year-on-year growth of between 22% and 32%.
It expects operating income in the current quarter to drop to between $50m and $650m, however, down from $1.3bn in the second quarter.
Colin Gillis of analysts BCG Partners said: “It was the largest June quarter profit in the company’s history, but we’re back to guiding barely any profitability.”
Amazon’s newer services played a key part in the growth surge. Its video streaming is bringing new customers to its subscription Prime service, which in turn drives more spedning on Amazon. The cloud unit, Amazon Web Services, is the company's fastest-growing business and is regarded by analysts as the next driver of growth for the company.
"They crushed estimates," said Michael Pachter, analyst at Wedbush Securities, as shares rose 2% after hours to close at $766.50, in line to open this morning at a record high. Revenue from Amazon Web Services grew 58.2% to $2.89 billion, beating average estimates of $2.83 billion.
Amazon's work force expanded by 47% in the second quarter, including part-time employees.
Bezos may not be third richest person on earth for long, though. Rising investment costs and a traditionally soft third quarter could pull the share price back down, while Buffett’s slide into fourth place was also due to his donation this month of $2.86 billion of Berkshire stock to the Bill & Melinda Gates Foundation and four family charities. Unlikely to rest on his laurels, Buffett most likely wll lose no time in boosting his fortune once again.
