The US stock market cannot do without technology, but tech tycoons are running away!
The latest data shows that Jeff Bezos has once again sold 12 million shares of Amazon stock, with a reduction of over $4 billion (approximately RMB 28.8 billion) since last Wednesday. Amazon (AMZN-US) revealed on February 2nd that Bezos plans to sell 50 million shares of the company's stock within 12 months, and he has sold nearly half of the planned positions in just four trading days.
Actually, it's not just Bezos selling stocks. In the past six months, many global tycoons have been selling their goods. In September last year, NVIDIA submitted a document to the US Securities and Exchange Commission (SEC) showing that the company's President and CEO, Huang Renxun, cashed out 310 million yuan in three days; Zuckerberg, founder of Meta (formerly Facebook), a metaverse company, sold his Meta stake on every trading day from November 1st to the end of last year, accumulating nearly 1.28 million shares and cashing out approximately $428 million over the past two months; A senior deputy to Tesla CEO Elon Musk developed a stock trading plan at the end of last year, allowing them to sell large amounts of company stocks in the coming months.
Last night, the US stock market experienced a crazy sell-off due to inflation data exceeding expectations. This morning, it was revealed that Bezos, the world's third-largest billionaire, was selling stocks crazily. So, what exactly happened?
Bezos Crazy Selling Stocks
Amazon (AMZN-US) announced on February 2nd that its founder Jeff Bezos plans to sell 50 million shares of the company's stock within 12 months. According to the latest data, he sold nearly half of the planned positions in just 4 trading days, with a total market value of over 4 billion US dollars.
Bezos has not yet explained the reason for his current sale, but the timing of his transaction plan may provide clues. He announced on November 2nd last year that he would move from the Seattle area to Miami, and only sold his stocks after the move, which means Washington State will miss any potential capital gains tax on stock sales.
Washington State imposes a 7% capital gains tax in 2022, while Florida does not have this tax. The world's second-largest billionaire has not sold stocks since 2021 and only donated $200 million in stocks at the end of last year, so he has never paid this new tax. After moving to Miami, Bezos sold his shares, and based on the current amount sold, his relocation may have saved him $288 million so far.
Washington State raised $855 million from capital gains tax last year, more than half of which came from 10 billionaires. This tax has faced some resistance in the state. Billionaire Ken Fisher said last year that he would relocate the company from Washington to Texas and criticized the tax and court rulings supporting it.
In the entire plan, Bezos is expected to sell 50 million shares, which are worth over $8.7 billion based on the 12 day stock price. Therefore, there has been no significant price fluctuation, and his planned shareholding is sold out, which is expected to save about $610 million in taxes.
Data shows that as of Monday's close, the last day Bezos sold its stock, Amazon's stock price has risen by 13% so far this year. However, the US stock market fell sharply on Tuesday, and Amazon also fell 2.2% to $168.64.
Tech tycoons sell off stocks
In fact, it's not just the founders of Amazon who are selling stocks. When AI was advancing rapidly, Huang Renxun, the founder of global AI leader NVIDIA, redeemed options on September 1st, 5th, and 6th last year and sold 29688 NVIDIA shares per day, totaling approximately 89000 shares. Huang Renxun acquired these stocks at a price of $4 per share through the exercise of options, with a total value of approximately $356300. The average stock price at the time of sale was approximately $480.87 per share, with a total value of approximately $42.8282 million.
According to regulatory documents, Zuckerberg, founder of Meta (formerly Facebook), a metaverse company, sold his Meta holdings on every trading day from November 1 to the end of last year. Over the past two months, he sold nearly 1.28 million shares and cashed out approximately $428 million. The largest selling was on December 28, when he sold $17.1 million worth of shares.
In the decade since Meta went public, Zuckerberg has regularly sold Meta stocks, but 2022 is an exception. In 2022, the US stock market suffered a heavy decline, and Meta performed exceptionally poorly under the impact of catastrophic financial reports. Its stock price plummeted by 64% throughout the year, and Zuckerberg did not sell any stocks. But last year, Meta rebounded strongly, rising nearly 200% throughout the year.
In addition, data also shows that Marc Benioff, co-founder and CEO of Salesforce, sold stocks almost every day in the second half of last year. During this period, Benioff sold over $475 million worth of stocks.
A senior deputy to Tesla CEO Elon Musk developed a stock trading plan at the end of last year, allowing them to sell large amounts of company stocks in the coming months. According to regulatory documents, Chairman Robyn Denholm's internal stock sale plan formulated in October last year may sell up to 281116 shares, which will be valued at $51.5 million based on Tesla's latest closing price. Andrew Baglino, Senior Vice President of Powertrain and Energy Engineering at Tesla, approved a trading arrangement in November last year that could sell up to 115500 shares worth $21.2 million. Denholm's plan will expire on August 16th, while Baglino's plan will expire on December 31st.
According to Forbes, in the first half of 2023, the world's 21 wealthiest billionaires sold a total of $9.3 billion worth of US listed company stocks. Billionaires Rob Walton, Joe Gebbia, and Larry Ellison are among the businessmen who profit by selling stocks. Now, it seems that this trend is still intensifying after the second half of 2023.
US stock foam?
Selling stocks by wealthy individuals still has some enlightening significance.
From the beginning of the year to February 7th, the US S&P 500 index rose 4.7%, surpassing the MSCI global stock index's 2.5% increase. However, the rise in US stocks seems to be mainly concentrated in technology giants, especially in the semiconductor industry related to AI. The Technology Seven Index in the United States recorded a 10.5% increase from the beginning of the year to February 7th, while the S&P Semiconductor Index saw an even higher increase of 17.5%. The technology "Big Seven" index surged by 106.6% last year. However, last year, the rise and fall ratio of the entire US stock market was almost halved, and stocks with gains exceeding 20% only slightly exceeded 25%.
DBS Bank believes that according to Bloomberg's analysis of profit growth for the next three years, S&P's technology and communication services industries have risen by 38.6% and 63.1%, respectively. The three-year profit growth rate of the seven giants in the US stock market is also as high as 66.5%. If we independently extract the semiconductor industry from technology, the profit growth in the next three years will be as high as 78.9%. The US stock market cannot do without technology stocks.
However, many experienced investors in the US stock market have issued warnings at this time. Legendary investor Jeremy Grantham recently warned that the excessively high US stock prices could lead to difficulties. He also believes that AI is a foam destined to burst, and the US economy will suffer a slight recession, or even worse. Grantham is famous for predicting economic downturns in 2000 and 2008. At the beginning of 2022, he warned that there was a "super foam" in the market, while the S&P 500 index fell 19% that year, and the NASDAQ index, which is dominated by technology stocks, fell 33%.
Jon Wolfenberger, a former investment banker at Merrill Lynch and JPMorgan Chase, said in his report released on January 22 that (the "seven sisters" of technology stocks), the savior of last year's market, may be a stumbling block in the future market. In the report, Wolfenberger compared the current environment with the Internet foam in 1990-2000, and believed that the current era of "technology foam 2.0" was under way.