It’s Bezos by a TKO
Talk about picking a fight with the wrong guy. Amazon boss Jeff Bezos in a stunning blog post has accused the National Enquirer and its parent company, American Media Inc (AMI), of extortion and blackmail.
The tabloid has photos of his naughty bits. This fight, between the world’s richest man and the most notorious publication in the US, is up there with the some of the greatest in history: Ali vs Foreman, Mayweather vs Pacquiao, Balboa vs Drago (yes, fiction counts).
I’m going to get to the stuff that matters: whether investors think the drama will have consequences for Amazon. But first, a brief history of the saga. On January 9 Bezos announced his divorce from Mackenzie Bezos, his wife of 25 years.
The next day the Enquirer published an exposé of Bezos’s affair with former TV anchor Lauren Sanchez, which included saucy text messages. Naturally, he hired investigators to look into the source of the leaks. The tabloid didn’t like this and, according to Bezos, threatened to release compromising images unless he called off the investigation and made a public statement that he had “no knowledge or basis for suggesting that AMI’S coverage was politically motivated or influenced by political forces”. Concede he did not.
Bezos, Amazon’s single largest shareholder, went public with what he called a blackmail attempt and struck back with a 2,000-word post on publishing website Medium. You should know that AMI CEO David Pecker has a decades-long relationship with President Donald Trump, who does not have much time for Bezos.
Trump has accused Amazon of dodging taxes at the expense of the US Post Office, and The Washington Post (which Bezos owns) of “trafficking in fake news”.
Trump, classy as always, had this to say: “So sorry to hear the news about Jeff Bozo being taken down by a competitor whose reporting, I understand, is far more accurate than the reporting in his lobbyist newspaper, the Amazon Washington Post. Hopefully the paper will soon be placed in better & more responsible hands!”
Bezos took over the newspaper, one of many businesses he owns and juggles along with Amazon, six years ago as traditional media outlets were hit by falling ad revenue and declining circulation. Under his ownership, the paper’s online audience and digital subscriptions have grown.
It is for this reason that analysts covering the retail juggernaut have largely shrugged off the drama in his personal life.
“He doesn’t get distracted easily,” says Tom Forte, an analyst at DA Davidson who believes Amazon’s stock price has the potential to rise more than 50% from current levels to $2,450.
“Look at his ability to concurrently advance Amazon, own The Washington Post, and develop space-flight company Blue Origin from scratch. That has in no way detracted from his ability to run Amazon.”
Other analysts concede that from a PR standpoint the whole thing isn’t ideal but say Amazon’s fundamentals are solid. If there is any concern around the company, it’s that Amazon is ramping up investment massively this year. Bezos founded the company, briefly worth more than $1-trillion, as an online bookseller in 1994.
Out of interest, an investment of $1,000 in Amazon in February 2009 would now be worth more than $23,600, according to a CNBC calculation. That’s an increase of more than 2,000%.
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