Blue Duck Capital's Open Letter to Amazon's Board

Investing.com — Blue Duck Capital, an investment manager and long-term Amazon (NASDAQ:AMZN) shareholder, issued an open letter to the company's board on Tuesday. The letter urged action to address "the lackluster performance" of the stock.

Blue Duck called for significant capital returns, improved efficiency, and clearer communication regarding Amazon's artificial intelligence (AI) investments.

The firm criticized Amazon's financial performance since CEO Andy Jassy took over in 2021. Although the stock has seen a nominal rise of 6.7%, it represents a negative 7% return when adjusted for inflation, lagging behind the S&P 500 and competitors like Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL).

In the letter, Blue Duck outlined several recommendations to revive the stock's performance:

• Initiate a major capital return program to align with Amazon's market cap and free cash flow.
• Expand efforts to capitalize on the growing health food movement through Whole Foods.
• Scrutinize media investments.

The firm emphasized that Amazon must adopt a shareholder-friendly strategy, including buybacks, to offset dilution from stock-based compensation. Blue Duck cited comparisons to Meta (NASDAQ:META) and Alphabet's shareholder returns.

The letter also raised concerns about Amazon's AI spending, urging more transparency. Blue Duck argued that Amazon's complex messaging could alienate investors.

Additionally, the fund criticized recent decisions in Amazon Studios, including the controversial "Rings of Power" series, and cautioned against more "unforced errors" in content investments.

The letter concluded by encouraging Amazon's board to realign its strategies, suggesting that such changes could drive the stock to over $250 per share within a year.