Arthur J. Villasanta – Fourth Estate Contributor
Seattle, WA, United States (4E) – Amazon.com, a company its founder, Jeff Bezos, in 1994 intended as the biggest bookstore in the world, is now the second publicly traded company to reach a market value of $1 trillion. Apple, Inc. became the first company to reach this peak in early August.
Amazon’s market cap passed $1 trillion on Sept. 4. Amazon shares rose nearly two percent to a high of $2,050.50 in morning trading yesterday. The stock had to hit a price of $2,050.27 to reach the $1 trillion mark, based on an outstanding share count of 487,741,189 shares. It did just that and more.
At the start of this year, Amazon was worth just $580 billion. By the second quarter, however, Amazon’s net income jumped to $2.5 billion compared to $197 million year-on-year.
In March, Amazon’s stock has soared 30% due to impressive growth in its core e-commerce business plus gains from its acquisition of Whole Foods in 2017 and revenues from its Amazon Web Services (AWS) cloud division. AWS supports enterprises ranging from the smallest start-up to multinationals and federal government agencies. Amazon’s market cap at the time stood at $730 billion.
Analysts said Amazon’s success is still being driven by AWS; the advertising Amazon sells across its sites and revenues from Prime membership subscriptions. AWS has been valued at $375 billion by Morgan Stanely, or a third of Amazon’s entire market value.
Morgan Stanley was bullish enough about Amazon raised its price target to $2,500, which will make Amazon worth $1.2 trillion based on revenue growth projections of 24% per year through 2020.
Amazon has remained an investor darling because it seems able to dominate any industry it enters. This, because of the data it has on Prime members and its ability to get goods from point A to point B very quickly. Another reason: Amazon’s price-to-earnings ratio is about 180, or more than four times that of its competitors in grocery, building supply and general retail.
Amazon and Apple now comprise more than 8% of the entire value of the S&P 500.
Now, we wait for Sen Bernie Sanders (I-VT) to wade in.
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