Amazon's Stock Plunge Marks Longest Losing Streak in Nearly Two Decades
Amazon recently experienced its longest streak of daily losses in almost 20 years, with shares declining by 18% over the last 10 days. This sharp drop erased approximately $463 billion from the company's market valuation, highlighting significant investor concerns. According to a Bloomberg report, shares of the e-commerce giant fell by 0.4% on February 13, marking the ninth consecutive negative trading session.
Historical Context and Market Reactions
This losing streak represents Amazon's most prolonged period of daily declines since a nine-day slide that concluded in July 2006. The recent downturn has sparked widespread analysis and comparisons to past market challenges faced by the tech behemoth. Amidst the current volatility, an old letter penned by Amazon founder Jeff Bezos has resurfaced on social media platform X, drawing renewed attention.
Jeff Bezos's Timeless Letter to Shareholders
Shared by journalist Jon Erlichman, the letter was originally addressed to Amazon's shareholders during the dot-com bubble in 2000. At that time, Amazon's stock had plummeted by 80%, yet Bezos emphasized a steadfast focus on long-term customer obsession rather than short-term market noise. In the letter, Bezos detailed the company's stronger fundamentals despite the stock crash, noting key metrics such as an increase in customers served and sales growth.
Bezos highlighted that Amazon served 20 million customers in 2000, up from 14 million in 1999, with sales surging to $2.76 billion from $1.64 billion. The pro forma operating loss improved significantly, shrinking to 6% of sales in Q4 2000 from 26% in Q4 1999. Additionally, the company achieved a record American Customer Satisfaction Index score of 84, the highest ever for a service firm in any industry.
Key Insights from the 2000 Letter
In his communication, Bezos posed a critical question: "So, if the company is better positioned today than it was a year ago, why is the stock price so much lower than it was a year ago?" He answered by quoting famed investor Benjamin Graham, who stated, "In the short term, the stock market is a voting machine; in the long term, it's a weighing machine." Bezos argued that during the boom year of 1999, there was excessive voting (speculative trading) rather than weighing (fundamental analysis), but Amazon remained committed to building a heavier, more substantial company over time.
The letter also underscored other positive developments, including a 19% increase in average spend per customer to $134, gross profit growth of 125% to $656 million, and international sales rising to $381 million. Bezos reassured shareholders that despite the stock downturn, Amazon's strategic focus on customer satisfaction and operational efficiency would drive long-term success.
Implications for Current Market Sentiment
The revival of this letter serves as a poignant reminder of Amazon's resilience through previous market upheavals. It reinforces the company's philosophy of prioritizing customer-centric metrics over fleeting stock performance. As Amazon navigates its current challenges, investors and analysts are likely to reflect on these historical lessons, assessing whether the recent losses signal a temporary setback or a deeper issue.
This episode underscores the volatile nature of tech stocks and the importance of foundational business health in weathering financial storms. With Amazon's ongoing innovations and market dominance, the long-term outlook remains a subject of keen interest in the corporate and investment communities.
