Amazon edges ever closer to trillion-dollar market cap – analysts see it happening this year
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Amazon edges ever closer to trillion-dollar market cap – analysts see it happening this year

Earlier this year, Apple became the world’s first trillion-dollar company. Amazon is not far behind. The ecommerce giant – best known as an online retailer, but increasingly a prominent figure in everything from streaming video on demand services to grocery shopping – is now just $26 billion short of a trillion dollar market capitalisation. $26 billion might sound like a lot – but bear in mind that Amazon has added $800 billion to its value since 2014.

Up 616% in five years – performance fitting for a trillion-dollar company?

graph 0409 amazon

SOURCE: Yahoo Finance

When you consider the figures above, a trillion-dollar valuation this year doesn’t look out of bounds. So far this year, the company has returned an incredible 71%. That makes it the fifth best performer in the S&P 500 over the first eight months of 2018. In the last twelve months, the company’s share price has doubled.

Speaking about the potential for Amazon to join the trillion-dollar club, Morgan Stanley analyst Brian Nowak said in a note to clients last Wednesday: "We have increasing confidence that Amazon's rapidly growing, increasingly large, high margin revenue streams (advertising, AWS, subscriptions) will drive higher profitability and continued upward estimate revisions."

Jeff Bezos, the company’s founder and CEO, has already become the world’s richest man. And many people believe he will one day become the world’s first trillionaire (although bear in mind, that goal is a LOOONG way further down the line than Amazon hitting the valuation discussed thus far). Arguably, it is Bezos’ incredible business savvy that has led Amazon to its current position. In a 1999 shareholder letter, he wrote the following:

"I constantly remind our employees to be afraid, to wake up every morning terrified. Our customers have made our business what it is, and we consider them to be loyal to us – right up until the second that someone else offers them a better service." At time of writing, it appears that no one has.

Disclosure

Dominion holds Amazon in its Global Trends Ecommerce Fund.


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