In its 20-year history of being a publicly traded company, Amazon.com saw its share price briefly surpass the $1000 mark on Monday for the very first time. The company’s chief executive and founder, Jeff Bezos, has mostly been dismissive of the preoccupation with the stock price swings in the near term. He has often quoted an influential investor Benjamin Graham, who said that in the long run, the market is similar to a weighing machine whereas it is nothing less than a voting machine in the short term. Essentially, Mr. Bezos has made it obvious that he wants his company to be weighed by investors and not be judged on the basis of a near-term popularity contest.
Nevertheless, finally breaking through the arbitrary threshold of a four-digit stock price indicates exactly how powerful and relevant Amazon has become since its inception. The ecommerce giant is now the fourth most valuable company in the market in terms of its market capitalization. The most dominant forces in the technology sector are the top five companies, which now include Apple Inc., Google’s parent company Alphabet Inc., Microsoft, now Amazon and then Facebook. There is a 33% rise in Amazon’s share price this year, which is a 368% increase in the last five years.
Experts said that with reaching the milestone of $1000 per share, Amazon is the triumph of Jeff Bezos’ vision for his company and the ecommerce market. In many respects, the optimism investors have about Amazon, has remain largely unchanged since the company went public in 1997. Amazon is nothing less than a long term move based on a wager that a healthy portion of traditional shopping will be replaced by online shopping. The company’s revenue was around $148 million in 1997, but it has seen staggering growth with its revenue reaching $136 billion last year.
Despite the huge growth in revenue, ecommerce still makes up about 10% of the total retail spending in the US, which is Amazon’s most mature market. Last year, the company accounted for 43 cents for every dollar that was spent in the United States, which means that there is still plenty of room for the company to grow. Some experts have said that in the coming years, Amazon’s profits could be incredibly huge as more and more retailers are closing their physical stores and filing for bankruptcy. Anyone trying to make an investment in the ecommerce sector is definitely going to put their money on Amazon because that’s where growth is coming from.
Furthermore, Amazon has also made moves that ensure investors that the company is simply not content on staying an ecommerce giant. It has also become the largest provider of cloud computing services, thanks to its introduction of Amazon Web Services. It stands to reap benefits from this venture for a number of years as hundreds of billions of dollars will be spent in information technology for moving from traditional hardware to software in data centers. Amazon will now be in the black consistently as cloud computing has wider profit margins as opposed to the retail market.