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SEATTLE — Amazon’s stock market valuation briefly topped $1 trillion this month, vaulting the online retailer into the exclusive club of $1 trillion companies alongside Apple Inc., which had hovered just below that valuation before a strong third quarter earnings report on August 2 pushed its share price to $207.04.
Amazon hit the $1 trillion milestone when its stock price touched $2,050.50 on September 4. Amazon’s valuations quickly dropped back down to the high $900 billions, but not before the company’s chief political rival, Sen. Bernie Sanders of Vermont, took to Twitter to renew his critique of the company and its place in the U.S. economy:
“Amazon is worth $1 TRILLION.
“Jeff Bezos is worth $155 BILLION.
“Thousands of Amazon workers have to rely on food stamps, Medicaid and public housing to survive. That is what a rigged economy looks like.”
Amazon disputed Sanders’ assertion that its warehouse employees don’t make a living wage and called his arguments “inaccurate and misleading.”
There’s no dispute that Amazon’s success is pressuring its economic rivals to innovate and invest at an unprecedented pace. But as Amazon continues to expand its retail ambitions through grocery stores and other brick-and-mortar initiatives, some of the nation’s most prominent retailers, including Walmart, Kroger Co. and Target Corp., have turned away from Amazon Web Services (AWS) and toward Microsoft to use its cloud services and productivity tools.
Amazon’s cloud contributed 11.5% of the company’s revenue in the quarter ended June 30 and helped Amazon post profits of $2.5 billion for the quarter, up from $197 million a year earlier.
Amazon’s unrelenting growth prompted one Wall Street investment firm, MKM Partners, to predict that Amazon’s market cap will reach $2.5 trillion by 2024, powered by its market-leading cloud computing business as well as its retail expansion.
Other investors took note when Amazon recently revealed that advertising had become a “multibillion dollar business” for the company.
Additionally, Amazon Business, the company’s business-to-business sales platform, is on track to top $10 billion in annual sales, the company recently said. That’s up from $1 billion in 2016, the program’s first year. Amazon Business buyers include 55 of the Fortune 100 companies and more than half of the nation’s 100 largest hospital systems, according to The Seattle Times, which reported that Amazon sees the B2B market — projected to reach $9 trillion this year — as a compelling growth opportunity.
Wells Fargo analysts wrote in a recent note to clients that they expect Amazon to surpass Walmart this year as the nation’s top clothing retailer. Wells Fargo estimates that Amazon will surpass $30 billion in sales of apparel and footwear in 2018. “[W]hereas only 1.4% of apparel and footwear sales were done on Amazon’s platforms in 2012, this figure grew to 7.2% last year and will likely be in the 8.5% to 9% range in 2018,” the analysts wrote. Amazon sells several of its own private label apparel brands, and it is filing trademarks for more.
Citigroup analyst Mark May sent a note to clients this month asserting that investors are underestimating the value of Amazon’s Prime membership service.
May noted that the large and growing Prime membership is not only a source of recurring revenue for Amazon but also serves as a compelling reason for brands and third-party sellers to rely on Amazon’s marketplace. May sees Prime-related sales accounting for more than $500 billion in annual sales within a decade as the membership roles swell to 275 million, from 101 million paid subscribers at the end of 2017. “Prime has been a tremendous success,” May wrote. “There are many benefits of having highly satisfied, membership-based customers, but a simple metric is most studies suggest Prime members spend twice as much as non-Prime members.”
