Amazon Valuation Hits $1 Trillion

Amazon.com followed Apple to become the second U.S. company to reach $1 trillion in market value, reflecting the online retailer’s striking transformation from a profitless bookseller into a disruptive force of commerce.

Shares of Amazon climbed 1.9% in midday trading on Tuesday 4 Sept 2019, briefly topping the $2,050.27 needed to push the company’s value above $1 trillion. The Seattle-based company hast demonstrated better financial discipline in recent quarters, reporting record profits because of lucrative businesses such as cloud computing despite aggressively spending on industries from health care to grocery delivery.

Amazon and Apple, which hit the trillion-dollar milestone on 2 August 2018, symbolize the growing influence of tech companies on markets and the economy. The industry is amassing wealth and power, creating a new order in business where the most valuable resource is no longer oil, but data. Not far behind in market value are Google owner Alphabet and Microsoft both approaching $900 billion, while Facebook Inc – which crossed $500 billion in July 2017, a day after Amazon – has stalled since then amid a data-privacy scandal and growth concerns.

Fig 1. Amazon closing the gap on Apple

Source: Dow Jones Market Data

Amazon has expanded rapidly since its humble founding as an online bookstore in Jeff Bezos’s garage in 1994. The internet then was just becoming a viable platform, and the most valuable companies at the time included industrial conglomerate General Electric Co., oil giant Exxon Inc. and telecommunications power AT&T Inc.

Amazon’s $1 trillion market value makes it roughly the same size as seven of the largest consumer companies put together.

Fig 1. Amazon closing the gap on Apple

Note: Figures as of Tues 4 Sept
Source: FactSet

Amazon was valued at less than $500 million when it went public in 1997. A $1,000 investment in the IPO would be worth roughly $1.4 million today, adjusted for stock splits.

Amazon has been successful by staying intensely focused on customers, working to retain top talent, innovating and taking big risks on projects.

Mr. Bezos has built his business by keeping prices low and expanding quickly. Opening the company’s site to millions of small businesses, retailers and manufacturers accelerated growth, helping capturing sales from other retail chains. Last year, the company’s online store sales topped $108 billion, and the services it sold other merchants added to that total.

It took Amazon just 165 trading days to grow its market value from $600 billion in January to $1 trillion, pushing it past the more established Microsoft and Alphabet. By comparison, Apple needed 183 sessions to hit $1 trillion after piercing $900 billion in November.