The total wealth of billionaires in this country in March stood at $2.95 trillion. By Sep. 3, this number had risen $970 billion to $3.92 trillion. In 24 weeks, their wealth increased by 33%. In 2020, the total wealth of Amazon (NASDAQ:AMZN) chief executive officer, Jeff Bezos, and his ex-wife Mackenzie Scott has increased by $84 billion, thanks in large part to the appreciation of AMZN stock.
To put in perspective how obscene an amount this is, former Secretary of Labor Robert Reich tweeted:
“Jeff Bezos could give every Amazon employee $105,000 and still be as rich as he was before the pandemic.
“If that doesn’t convince you we need a wealth tax, I’m not sure what will.”
No, this isn’t a political statement. It’s merely meant to illustrate the tremendous gains Amazon’s made in 2020. Up 56% year-to-date through Sep. 21, one must wonder if the good times can keep rolling along.
I believe they can, but only if Bezos and the rest of the Amazon brain trust truly consider Reich’s tweet.
The Bezos’ Ought to Be Thankful
The pandemic has boosted the fortunes of billionaires across the land. Meanwhile, average folk is struggling to keep their heads above water — Amazon employees included.
In January 2018, I predicted that Amazon stock should reach $10,000 between January 2023 (five years) and January 2025 (seven years). In May, I suggested that if AMZN stock is to hit $10,000 within my timeframe, it’s got to continue to have success and revenue growth from its advertising and Amazon Go businesses.
Sure, e-commerce will continue to generate massive volumes, and Amazon Web Services will generate the lion’s share of the profits. Still, those two segments of its business face increasing competition in the years ahead. It can’t sit back and rely on them if it wants to deliver greater rewards for shareholders.
But at a time when stakeholder capitalism is on the rise, Jeff Bezos and the rest of his management team have got to figure out how to maintain warp-speed growth while meeting the needs of all its stakeholders, not just shareholders.
As the wealthiest person on the planet, Bezos ought to feel a moral obligation to operate a business that meets the needs of all stakeholders, himself included.
Total Stakeholder Return
As JUST Capital CEO and co-founder, Martin Whittaker says, “total stakeholder return” can lead companies like Amazon to the promised land. Profits only is an outdated model for capitalism, Whittaker believes.
“Fifty years of shareholder primacy has generated an enormous amount of wealth for many people and thrust corporate America to the commanding heights of the global economy,” Whittaker wrote in a recent opinion piece for Business Insider.
Whittaker notes that polling done by JUST Capital, in conjunction with The Harris Poll, shows that Americans of every description yearns for capitalism that cares about employees, customers, communities, and the environment. Last on the list of key stakeholder issues is the shareholder.
Americans overwhelmingly believe that if you take care of all the other stuff, shareholders will benefit.
So, in 2020, Bezos and Scott have seen their wealth increase by $84 billion, while 12.63 million Americans filed jobless claims in the week of Sep. 7 through Sep. 11. The inequality that existed before the pandemic has only magnified over the past few months.
AMZN Stock Could Lead the Way
I would argue that if Amazon were to take up the “total stakeholder return” model of value creation, a $10,000 share price would come sooner rather than later. I might be presumptuous, but I would guess Whittaker would feel the same way.
“In a world where intangible value makes up over 84% of all enterprise value on the S&P 500 (up from just 17% in 1975), a stakeholder operating framework provides a better model for understanding the relative value created by investments in intangible assets linked to stakeholder value creation, including brand recognition, customer loyalty, and most importantly, human capital — employee and contractor training, education, loyalty, engagement, health, etc; all ‘value creation’ for workers under the stakeholder model,” Whittaker explains.
As I’ve said on several occasions over the past couple of years, Amazon can’t continue to mistreat a group of its employees and expect business to be all hunky-dory. Eventually, the ESG police will catch up with it.
In 2020, with an extra $84 billion in pocket, it’s time for Bezos to show how thankful he is for all his stakeholders. Actions speak louder than words.
$10,000 depends on it.
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.