One of the big financial stories of 2014 has been Amazon versus its investors. The company’s stock, after climbing nearly 40% in 2013, started to slip early this year, then plunged 11% on the last day of trading in January. Throughout February, the stock remained in the doldrums.
Investors, it seems, are weary of Jeff Bezos’ practice of plowing Amazon’s oversized revenue into secret projects designed to grow the massive company even more. The stock’s big drop in January coincided with the company’s announcement that it planned to raise the price of Amazon Prime, a sign that investors don’t trust management to use whatever money the price hike might generate to benefit shareholders.
Amazon is a striking case of tension between investors and management, but it is hardly unique. The dynamic exists in most big and successful public companies, and it is present in privately held firms and many startups.
Read the full post at Forbes.
Lou Shipley is a Lecturer at the Martin Trust Center for MIT Entrepreneurship at the MIT Sloan School of Management. He teaches course 15.387, Technology Sales & Sales Management.