Former bookseller briefly crosses $1 billion market valuation threshold as broadening portfolio drives growth
Amazon this week joined Apple in the trillion dollar club, after its stock briefly hit a $1 trillion (£772bn) market valuation on Tuesday.
Amazon’s stock price reached a high of $2,050.50 in Tuesday morning trading pushing it above a trillion dollars, but the stock price fell to $2,039.51 and a market value of roughly $995 billion in later trading.
Last month Apple became the first publicly traded US company to be worth $1 trillion (£770bn), and it remains above the trillion dollar threshold.
Amazon’s growth in valuation is down to its broadening product portfolio. The firm of course was founded in 1994 by Jeff Bezos in Seattle selling mostly paper-based books, before becoming the e-commerce giant it is today.
Amazon’s move into the grocery business with its purchase of Whole Foods Markets, its advertising sales business, and the improvement in its hardware and logistics segments with last-mile deliveries, are all being cited by analysts as a reason for Amazon’s increase in value.
It should be noted that Amazon has a bit of advantage in the advertising space, as its adverts reportedly tend to result directly in sales, as they target customers on Amazon who are already intending to shop, unlike adverts on say Facebook and Google.
“They have given investors confidence that they can go and disrupt markets just like they’ve done with retail,” Loup Ventures’ Gene Munster told CNBC’s “Squawk Alley”.
However, one of the jewels in Amazon’s crown is the impressive growth in Amazon Web Services, which grew nearly 50 percent in the second quarter.
“Yes, Amazon did really well in online retail, but then the stock gapped up when they showed that they could become successful in cloud,” RBC Capital Markets analyst Mark Mahaney told CNBC. “It’s almost like the ticker changed from AMZN to AWS.”
All of this growth has helped CEO and founder Jeff Bezos become the world’s richest man.
This is despite the fact that Amazon is a company that famously never made a profit until 2001. Bezos’s firm is now also said to be the eighth largest employer in the United States.
It operates separate retail websites for the United States, the United Kingdom and Ireland, France, Canada, Germany, Italy, Spain, Netherlands, Australia, Brazil, Japan, China, India, and Mexico and at the start of 2016, its US website was attracting over 130 million customers per month.
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