S&P 500 Rises for the Fourth Straight Day

Dow: +1.08% | Nasdaq: +1.23% | S&P: 1.09%

Catch Up Quick

• Treasury Secretary Janet Yellen will convene with heads of the SEC, the Fed, New York Fed and CFTC to discuss recent retail market volatility

• New coronavirus infections slowed by nearly 16% over the past week (Axios)

• A Kiplinger & Personal Capital survey found ~60% of people had withdrawn from their IRA / 401(k) during the pandemic

• PayPal ($PYPL) announced it added a record ~73M active accounts in 2020 and its revenue beat consensus estimates with pandemic-buying fueled growth

• House impeachment managers are inquiring Trump to testify in Senate trial

• Netflix ($NFLX) picked up 35% of all nominations for the 2021 Golden Globes

• 1/3 of small businesses say they are unlikely to survive without additional government assistance (Federal Reserve Survey)

• Sana Biotechnology, a Seattle gene regulation startup, raised $588M in its IPO → implying fully diluted market value of ~$5B

• Oil prices rose ~2% on Wednesday → U.S. West Texas Intermediate (WTI) crude barrels touched their highest price since January 2020

• The SEC is searching social media posts for signs of market fraud

• eBay ($EBAY) gross merchandise volume of for the quarter rose 21% to ~$27B, driven by strong sales of luxury watches and sneakers → ad revenue passed $1B for the year as well

• Kraft Heinz ($KHC) is in talks to sell its Planters snack unit to Hormel Foods ($HRL) for ~$3B (WSJ)

• Shell ($RDS.A) reported a sharp drop in 2020 profit alongside a raised dividend

• Yesterday, The White House confirmed Biden will keep the Space Force

• The Canadian government designated the Proud Boys as a terrorist organization

• The Senate began discussion around a budget resolution that would pave the way for Biden's $1.9T stimulus bill to pass with a simple majority

• Ant Group, whose shelved IPO was set to be the biggest in history, reached a deal with Chinese regulators to transition into a financial holding company

Thought of the Day

• This past Tuesday, Jeff Bezos turned the heads of many in announcing his retirement as Chief Executive Officer of Amazon ($AMZN)

• The billionaire stated that the role was a deep, consuming responsibility, and that he forwardly intends to focus on passion projects and philanthropic ventures (Blue Orgin, The Washington Post, Day1 Fund, the Bezos Earth fund, etc)

• Taking a step back, during the week of November 4th 2020, many news sources began calling out Bezos’ extensive recent selling behavior of Amazon shares:

  “This week alone, Jeff Bezos sold $3B of Amazon stock → the latest in a series of scheduled sales that now exceeds $10B in total volume this year” (paraphrased from Bloomberg)

• Between robust equity markets and enormous macroeconomic tailwinds behind eCommerce, this huge shift of net worth away from Amazon shares could’ve led a keen eye to potentially hold a move of this sort in the realm of possibility

• Furthermore, in a heartfelt letter to Amazon employees, he wrote:

  “We’ve done crazy things together, and then made them normal…if you get it right, a few years after a surprising invention, the new thing has become normal. People yawn. And that yawn is the greatest compliment an inventor can receive”

• In retrospect, founded in 1994 with a current market cap of ~$1.7T, Amazon effectively navigated the rise of the internet to become a vanguard of eCommerce, cloud computing (AWS), IoT, and subscription services, among other huge, fast-growing tech sector addressable markets…all from the starting point of an online bookstore

• While many critiques point to antitrust concerns, superfluous wealth hording, and questionable treatment of blue collar workers, this narrative holds objectively impressive features regardless of perspective

The Bottom Lines

• It is interesting to have in mind Jeff Bezos’ successor → Andy Jassy, the company’s current top cloud computing executive

• While AWS accounted for only ~10% of Amazon’s 2020 revenue, it contributes to a staggering ~52% of its operating income

  The global cloud computing market size is expected to grow from $371B in 2020 to $832B by 2025, reflecting a CAGR of 17.5% (paraphrased from ResearchAndMarkets)

• Between the opportunity cloud represents, its ability to scale with less friction than eCommerce (which requires complex supply chain tangibles), the margins it lends, the fact that AWS has only 34% market penetration (Synergy Research Group), and the fact that the former AWS CEO is now king of the Amazonian empire, a vivid strategic trajectory surfaces!

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