Now official. Amazon is the world’s 2nd company to cross the $1 trillion mark. For a brief period of time yesterday Jeff Bezos’ company was worth $1 trillion, with its shares trading at around $2,050. The stock price has since then plunged, leaving Apple as the only company above the benchmark. Apple, that was lucky enough to grab the first place, did so only five weeks ago. One AMZN share is now worth $2,039. In the last seven days of trading the company has added $72 billion to its market capitalization (which is more than 80% of the companies in the S&P 500 companies). Amazon has appreciated 70% since the beginning of 2018 and has more than doubled over the course of 12 months. S&P 500, on the other hand, only managed to grow 8% this year and 17% in the last 12 months. Over the last 5 years the company appreciated 593%.
Portfolio diversification is dubbed the reason behind the company’s unprecedented growth. Amazon has recently added Whole Foods Markets to its brand portfolio, when it acquired the grocery business last year. In the spheres of online advertisement and traffic acquisition it is ready to challenge giants like Facebook and Google — something that was hard to imagine mere 5 years ago. As of recently, Amazon Web Services have demonstrated decent growth, expanding 50% over the course of the second quarter. Cost-saving initiatives and overall cost effectives have contributed to the profitability of the whole business. Positive Q2 results, disclosed in the most recent earnings report, have likely motivated traders to push the stock price higher.
“Yes, Amazon did really well in online retail, but then the stock gapped up when they showed that they could become successful in cloud. It’s almost like the ticker changed from AMZN to AWS,” says RBC Capital Markets analyst Mark Mahaney.
How much growth potential is still left in Amazon? Chances are, Bezos’ company will continue going up in price in the foreseeable future should the global economic climate remain good for the company. Yet short-term falls cannot be ruled out completely.
When Apple crossed the fateful threshold, there was little doubt that Amazon will soon follow its example. Now, however, it is unclear what companies will be next. There are several contenders for the name of the “world’s 3rd company to reach $1 trillion threshold”. Meanwhile, Apple is sitting at around $1.1 in market value.