Move over Apple, now you’ve got some competition when it comes to the elusive $1 trillion market value.
Yes, as of September 4, the tech leader now has company from Amazon, which became the nation’s second-ever company to reach the $1 trillion milestone. Apple reached it in early August, and Amazon, a company that hasn’t even celebrated its 25th birthday yet, now joins the club. It’s a remarkable accomplishment, and one that certainly pleases investors.
Let this sink in: More than 90 percent of all retail spending done in America is done on Amazon or properties owned by Amazon. And you’d have to add up the market share from the 14 largest big box retailers in order to get to the $1 trillion number that Amazon now boasts. It’s pretty darn significant how a fairly young company has blown the doors off of its competition.
Amazon’s Road to $1 Trillion
By and large, Amazon has reinvested into its company to get to where it is today. Specifically, it has reallocated a certain percentage of its annual profits to grow its operations via the likes of distribution and fulfillment centers to enable faster shipping of online orders, Amazon Web Services (its cloud computing division which is particularly booming), its Prime platform and who can forget about its acquisition of Whole Foods? More recently, Amazon purchased Pillpack, an online pharmacy. Rumors suggest that there could be more notable acquisitions on the way to further grow its operations.
The Race to $2 Trillion
Now that two American companies have reached the $1 trillion market value milestone, it’s only natural to wonder when one (or both) of them will reach an even more coveted $2 trillion market share status. To do it, Amazon’s stock would have to double – and this is something that its done before, and it’s done this over the course of the past year. In previous editions of this report, we detailed some of the ways that Apple is still growing and likely to grow, and we’ll do the same here with Amazon. Here’s a look at how Amazon can get to $2 trillion market share:
More acquisitions: Though acquisitions can make investors nervous, Amazon has proven successful with its major ones in recent years. Now, there are rumors floating around that the company is far from done in buying. The most frequent rumor we hear is Amazon’s interest in the Landmark movie theater chain, which could shake up the cinema market as we know it.
New markets: We’ve also been hearing a lot about how Amazon is trying to break into the gasoline and travel markets. While the former is more of an educated guess, there’s been talk about how much Amazon likes Costco’s business model of offering members discounts on gasoline at service stations right outside of select stores. The thinking is that Amazon could follow a similar strategy in offering discounts to its Prime members. How they may go to execute this is anyone’s guess, but it could prove to be another lucrative revenue stream for the company. What’s more is the company has options. It could implement gas stations outside of its larger Whole Foods stores in more suburban areas. It could also strike up a strategic partnership with an existing gas station chain. Or, it could buy an existing gas station chain. We’re not ruling out anything when it comes to this company.
Travel: Amazon tried to get into the travel business a few years ago via its short-lived and ultimately unsuccessful Amazon Destinations channel. Now, there’s reason to think the company may be open to trying something like this again. One analyst predicted that Amazon might try to start a service to rival Airbnb. Others think that it may try to buy a well-established travel website, like Priceline. Stay tuned on this one, as something appears imminent.
Another unique thing about Amazon is that it seemingly only gets stronger as it gets bigger. Certainly, this isn’t something that every company can claim, as bigger isn’t always better for many business models. That’s another big part of the reason why Amazon’s stock has shot up following acquisitions.
Welcome to the $1 trillion club, Amazon.
Regards,
Ethan Warrick
Editor
Wealth Authority
