Amazon: the world’s first $1 trillion company?
Amazon’s growth has been prodigious over the last 12 months, rising by almost 80%. This is just the latest in a growth story that spans decades, and if the company keeps it up it could be as little as a year away from passing a global milestone: becoming the world’s first $1 trillion company. At least, that’s the message from GBH analyst Dan Ives, who recently raised his price target for the Ecommerce titan.
Over five years, Amazon’s share price has appreciated an incredible 469% - and it’s showing no signs of slowing down!
SOURCE: Yahoo Finance
Amazon is perfectly positioned for growth. It’s retail business keeps getting stronger, as it pushes competitors like Walmart further to the peripherals. Add to this the fact that Amazon is expanding into offline retail, groceries, healthcare, and more, and the premise is simple: Amazon is disrupting the entire retail industry the same way it has bookselling.
Amazon’s ambitions go beyond the “everything shop” that founder Jeff Bezos used to talk about. The company has a powerful SVOD (streaming video on demand) presence (Amazon Video), a streaming music presence (Amazon Music), and an online video game presence (Twitch). The glue that binds all these services together – along with Amazon’s core retail business – is highly effective Prime service.
Amazon Prime members pay a yearly fee for free shipping and access to the various features of Amazon’s media ecosystem. It is wildly popular because it is a great deal: Prime members spend more, are incredibly loyal to the company, and act as brand ambassadors.
Beyond all this, beyond Amazon’s nascent advertising business (which, according to marketing mogul Sir Martin Sorrell is poised to be a competitor to Google and Facebook’s incredibly lucrative businesses) and beyond the numerous “moonshot” innovations the company is working on, Amazon has yet another powerful route to growth: Amazon Web Services (AWS).
AWS is fast becoming one of the biggest names in cloud computing, and has captured the beginning of the growth cycle supplied by connected homes and the like. As the Internet of Things (IoT) advances, cloud computing will be an indispensable feature of the modern world (IoT uses cloud computing to function). This growth is just beginning, and Amazon is in a prime position to capture what’s coming.
Could Amazon become the world’s first trillion-dollar company before 2020? Predicting firsts is no easy task – but betting against Bezos often proves to be a fool’s game.
Dominion holds Amazon in its Global Trends Ecommerce Fund.
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