alt Hacker NewsWarren Buffett dumps $1.7B of Amazon stock
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My view of Amazon's decline comes from being a "partner" in their seller and publisher ecosystems for years.
The seller platforms in particular (Brand Registry, Vendor Central, Seller Central, Transparency, etc.) have crippling levels of technical debt. The situation has only gotten worse with Jassy's reckless directive for the entire organization to push into Generative AI (https://www.aboutamazon.com/news/company-news/amazon-ceo-and...). So much basic stuff is just breaking down, and seller support is overwhelmed or unable to intervene to fix the mess.
You can see a small sample here involving problems with product attributes (https://sellercentral.amazon.com/seller-forums/discussions?s...). Google "Amazon AWD delays" or "Amazon CSBA problems" or "Amazon remote fulfillment problems" to see examples of programs that are unable to provide even basic levels of the services promised to sellers.
Meanwhile, Amazon has been so greedy with fees since Jassy took over that sellers of all sizes and many small to midsized brands are being squeezed out of existence or driven off Amazon. Its PPC ad platform is completely predatory, loaded with dark patterns and hidden defaults that add billions to top-line revenue while strip-mining the accounts of sellers who often have no choice but to participate in the auctions.
It's clear that Amazon is running scared when it comes to dealing with new competition, including the Chinese shopping sites and the looming prospect of agentic AI and other new AI-powered shopping tools eating its lunch. For the first time ever last month, I saw an Amazon search results (via Rufus) that actually directed shoppers to third-party brand sites. This would have been heresy 5 years ago.
Berkshire Hathaway has my favorite website (or, WEB page, as they style it) of any big company: https://www.berkshirehathaway.com/
Maybe the novelty of Amazon has worn off. I occasionally purchase from their UK site, and it’s filled with tricks to get me to sign up for Prime upon checkout. Really horrible workflow and design decisions, cheapening the experience. I now see similar changes to the US version: ‘you saved $15 in shipping by being a Prime member with this purchase’ and ‘last year you made 211 sustainable product purchases’.
Guys, quit being so desperate. Concentrate on quality items at competitive pricing and fast delivery. Don’t turn into TJ Maxx.
My Echo, that I use solely to voice activating lights and switches, is now an ad machine and one bad day away from going in the trash. Next time you do a wave of layoffs, please include everyone involved in these horrible decisions.
Berkshire Hathaway, not Warren Buffett.
Large stock sales always make headlines but they don't automatically signal bearishness or really anything else. After all what's the point of investing if you never realize gains?
Amazon's core business does not make sense. Despite being so massive, their retail operation makes almost no money. There is little market share left for them to win, the best they can do to grow is shave expenses.
AWS has been their real money maker, but also the explosion of AI and server farms has worked against them in threes ways: there is much more competition on infrastructure, the costs to run infrastructure keep going up, if you're looking for a growth industry there are other more appealing stocks now to park your capital.
There is only so much cash a company can burn.
Amazon spent last year 100B in Capex. They announced they will spend 200B this year. These numbers are INSANE. Greater than GDPs of entire countries.
They literally don't have the cash to do it. Either they need to grow their cash flow significantly, or deplete their cash reserves or take a huge loan (likely a combination of them).
Jassy is playing Russian roulette with the company and his career.
Here is a Berkshire Hathaway portfolio tracker if anyone is interested:
https://www.quiverquant.com/institutions/BERKSHIRE%20HATHAWA...
Berkshire also sold around $2.8B of Apple stock, although that was a much smaller move as a percentage of their position.
Amazon is pretty volatile stock at the moment, as are most companies that chase the AI bandwagon. I don’t think Amazon is doomed but the companies chasing AI are in for a rough time.
Plus continuing waves of layoffs will lead to more frequent and longer AWS outages, and lower quality of retail products will hurt that side of Amazon.
Next time Amazon goes low I'm sure he'll buy it all back at a discount. With all his wealth he can get away with slow patient investing with swathes of cash.
IMO AI is going to make buying things you need for your household without going through the clownshow that is Amazon a lot easier.
Adding the obligatory disclaimer: Berkshire Hathaway selling $1.7B of Amazon stock is likely a decision by Ted Weschler or Todd Combs, still notable but not necessarily Warren Buffett himself.
It's right in the post, but just to save folks a click it's a 77% drawdown in the position so it's a substantial move. I see they also trimmed Apple, but, for comparison's sake, looks like that was only a decrease of 4.3% of the position.
I’ve heard that Amazon’s capital expenditures have exceeded its annual cash flow, leading it to borrow and cut jobs to fund AI investments. Unlike Microsoft and Google, which appear able to fund capex internally, Amazon seems to be in a costly growth race with deeper-pocketed competitors. My view, this could mean continued heavy borrowing and limited to no profitability in the near term.
One positive out of this is that it could bring MacKenzie Scott's net worth down a bit (she still holds significant Amazon stock), leading to her spending less on harmful donations...
Berkshire, Not Buffet.
Also, why would anyone want to work at Amazon at this point?
One of the worst companies to join with the worst margins out of the big tech companies.
After Amazon has been a great friend to the Trump administration, by partnering with Flock, by funding the Melania documentary to basically bribe Trump, etc - why should Americans or others trust them or give them business? Amazon isn’t that interesting anymore. You can buy most things directly from a trusted manufacturer or other websites. I don’t see them doing anything innovative at all. What’s the last useful thing they did - AWS? And that stopped being novel more than 10 years ago.
The problem is, megacorp with infinite capital get to make these massive mistakes and stumble through failure after failure, when everyday entrepreneurs get crushed for the tiniest problem.
mamma mia! didn't he step down? very cool that he's back in the game
The purchasing experience when you buy direct from companies now is usually much easier than it was years ago. A lot of people instinctively turn to Amazon because its one click and stuff is on its way, but with the new payment integrations even small companies have a pretty close to 1 click experience as well. So when I think of buying something on Amazon I always check the actual brands website first now, because I don't want to support Amazon at all or force sellers to eat the overhead.