Börse Express – Jeff Bezos sells over $ 3 billion worth of Amazon stock – should you do that too?

Don’t look now, but the CEO of Amazon.com (NASDAQ: NASA), Jeff Bezos, has just liquidated a large chunk of his own company’s stock.

According to SEC filings, Amazon’s boss sold $ 3.1 billion of Amazon stock in just two days in August under a pre-agreed 10b5-1 trading plan. The first question that probably comes to mind when you hear this is, “If the CEO is selling, should I sell too?”

Here are three reasons why I think the answer to this question is “no” – or at least “not necessarily”.

Reason # 1: Bezos didn’t sell – the calendar did

So Jeff Bezos suddenly decides to sell $ 3 billion worth of stocks just before an earnings report or just before Amazon releases Prime Day sales. I can imagine that some investors will find that worrying. It could raise suspicions that the CEO is trading inside information – and getting out before the bad news breaks.

But that’s not what’s happening here at all.

These sales were conducted on a 10b5-1 trading plan which excludes the possibility of trading non-public information as it automates the sales. An executive who sells under a 10b5-1 trading plan commits to sell a pre-approved number of shares on pre-determined dates. So it was the calendar that decided it was time for Bezos to sell his shares. And not the arrival of bad news.

Reason # 2: Buy low, sell high

And here’s further evidence: According to SEC filings, Bezos conducted his stock sales in four large chunks over the course of two days, selling shares at prices between $ 3,120.70 and $ 3,150.09 per share. But can you guess how much Amazon’s stock was selling for just two days after Bezo’s last stock sell order was executed?

According to S&P Global Market Intelligence, Amazon shares closed at $ 3,225 on Thursday, August 6 – nearly $ 75 above the best price Bezos got for its shares. And this Thursday, the stock was still trading $ 10 above the CEO’s selling price.

Obviously, Bezos didn’t sell his shares in anticipation of bad news or in anticipation of a major sell-off.

Reason # 3: context is everything

So why did Bezos sell? Why would anyone sell? We usually sell stocks for one of two reasons. We need cash or we see a better investment that we would rather invest in.

In the case of Jeff Bezos, both reasons could apply.

Like space pioneer and colleague billionaire Elon Musk, Bezos is building his own space company – Blue Origin – to help humanity become a multi-planetary species. However, such big ambitions don’t come cheap, as the Amazon CEO admitted a few years ago. In order to finance Blue Origin, he currently has to “sell about 1 billion US dollars a year in Amazon shares and invest in Blue Origin”.

Now, admittedly, $ 1 billion is barely a third of the value of Bezos’ stock sales this month – and barely a seventh of its total stock sales this year. But give the man a break, he’s built a space company from scratch. He also looks into the aftermath of a divorce in 2019 that resulted in $ 38 billion in severance pay. You don’t have to know the details of your financial situation to imagine how it is affecting your finances. It may have encouraged him to increase the pace at which he converts stocks into cash via the 10b5-1 trading plan.

For that matter, even $ 7.2 billion worth of Amazon stock is only about 2.3 million at Thursday’s stock price of $ 3,161. Even after this year’s sales, Bezos still owns 54 million Amazon shares. In theory, Jeff Bezos could sell $ 7.2 billion worth of shares every year. And it would still be at least 23.5 years before it reduced its holdings to zero, or longer if Amazon stock continued to grow at the rate it has before.

At 56, Bezos may run out of birthdays before running out of Amazon stock for sale.

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