He "stepped down" from the CEO role to a position of executive chairman. Which basically means he retains decision making power but doesn't have to actually show up to the office every day. It would definitely tank the stock price.
Also, the assumption that markets react rationally and that the price wouldn't tank in such case if he actually didn't work there anymore is a pretty bold assumption to make.
Never said It was a good idea! I personally think it was a dumb plan. However, I'm guessing if he did somehow die it would make amazon go down just because he is still related.