Jeff Bezos, founder and former CEO of Amazon, recently sold off nearly $4 billion worth of shares in the e-commerce giant over just four days of trading. This massive stock sale comes on the heels of Bezos announcing plans to dispose of up to $50 billion in Amazon shares in the coming months.
The sale of 24 million shares, revealed in regulatory filings, transpired between January 30th and February 2nd of this year. At recent prices, this equates to around $4.2 billion total. Prior to this sudden flurry of sell-offs, Bezos had not liquidated any Amazon holdings since 2021.
The timing coincides with Bezos’s high-profile move from Washington state to Florida. Capital gains taxes in Washington recently increased to 7% with the passing of a new state law in 2022. Florida notably does not levy any state taxes on capital gains. By relocating prior to selling billions worth of longtime Amazon shares, Bezos likely stands to save himself nearly $300 million in taxes.
Amazon stock is up over 13% since the start of 2023 amidst a rally in technology stocks. However, shares dipped 2.2% on Tuesday February 7th to close at $168.64. This marked the final day of Bezos’s selling spree per filings.
While the founder has not openly explained the impetus behind cashing out now, the proximity to his change in residence speaks volumes. Jeff Bezos incorporated a Rule 10b5-1 trading plan for selling precisely one week after announcing his move to Miami. This rule allows major shareholders to schedule future stock sales in advance to avoid accusations of trading on insider knowledge.
By only ever acquiring a single share in the company he started in 1994, virtually all of Bezos’s net worth in Amazon would be subject to capital gains tax at time of sale. His relocation from a state with one of the highest capital gains tax burdens to one with none at all suggests huge tax savings was the motivation.
Washington’s 7% capital gains tax took effect last year and raised around $855 million in its first year – over half of which reportedly came from just ten ultra-wealthy individuals. The tax remains controversial, with some billionaires threatening to move operations out of state and a ballot initiative in the works to possibly repeal the tax altogether.
While Bezos has provided no statements on the reason behind or plans for his mega stock sell-off, the timing implies a desire to liquidate holdings before taxes eat up billions in potential gains. By exiting Washington before the state could take a huge tax bite out of his Amazon fortune, Bezos managed to free up billions in cash while simultaneously cutting costs.
