Markets

Amazon (AMZN) Reaches $1T Trillion Market Cap, Joins Apple

It was matter of “when” not “if” Amazon (AMZN) would ever reach a market capitalization of $1 trillion. The e-commerce giant accentuated its seemingly unstoppable momentum, joining Apple (AAPL) as the only two publicly-traded companies to command such a value.

Reaching 13-digit territory wasn’t that hard for Amazon, which saw its stock price pass the $2,000 mark on August 30. The shares have soared some 80% year to date, crushing the 6.5% rise of the S&P 500 index. Started as an online book store, but blessed by boundless confidence, the 24-year-old company, which cracked $100 per share in October 2009, earlier today reached the $1T price of $2,050.

Just how remarkable is the $1T achievement?

When the year started, Amazon was valued at $580 billion. The company would often forego billions annually in profits to grow its logistical strengths. And, in the process, it not only re-invented retail, but also put a number of brick-and-mortar stalwarts out of business. For some context, consider that its collection of brick-and-mortar rivals, including the likes of Walmart (WMT) and Best Buy (BBY), still account for some 90% of all retail spending.

And here’s the thing: one would need to add up the collective market caps of the top fourteen largest retailers in order to balance the $1T scale Amazon ow stands on.

And despite the company’s sizable market cap, investor appetite for Amazon continues to grow, especially now that the company has begun to focus more on profitability, posting a Q2 next income of $2.5 billion, compared to only $197 million in second quarter of 2017. And unlike previous years, Wall Street seems more willing to accept the fact that Amazon will march to the tune of its own horn.

Part of the reason is the company has been rewarded for consistently betting on its future. Its recent entry into groceries via last year’s $13.7 acquisition of Whole Foods was the latest example. And aside from the company’s ambitions in the realm of digital advertising where the aforementioned Google and Facebook (FB) dominate the $88 billion annual online ad market, Amazon CEO Jeff Bezos has not been shy about the company’s interest in pharmaceuticals.

For these reason, Amazon — despite its lofty price-to-earnings ratio of 180, compared to a 40 P/E for brick-and-mortar retail peers — remains one of the cheapest stocks on the market. For that matter, most of techs, which has pushed the indices to new highs in 2018.

The $1T mark was once considered a mythical number, but by this time next year Amazon and Apple could be joined by Microsoft (MSFT) ($853B market cap) and Google (GOOG , GOOGL) ($838B market cap), making it a very exclusive club indeed.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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Richard Saintvilus

After having spent 20 years in the IT industry serving in various roles from system administration to network engineer, Richard Saintvilus became a finance writer, covering the investor's view on the premise that everyone deserves a level playing field. His background as an engineer with strong analytical skills helps him provide actionable insights to investors. Saintvilus is a Warren Buffett disciple who bases his investment decisions on the quality of a company's management, its growth prospects, return on equity and other metrics, including price-to-earnings ratios. He employs conservative strategies to increase capital, while keeping a watchful eye on macro-economic events to mitigate downside risk. Saintvilus' work has been featured on CNBC, Yahoo! Finance, MSN Money, Forbes, Motley Fool and numerous other outlets. You can follow him on Twitter at @Richard_STv.

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