News & Analysis
News & Analysis

Amazon on Track to Become a $1 Trillion Company

22 March 2018 By GO Markets


Amazon on Track to Become a $1 Trillion Company

By Klavs Valters

With Apple close to becoming the first company in the world to reach $1 trillion market cap, Amazon is also closing in. As one of the world’s largest online retailers it is on track to reach the milestone by 2022, according to Jefferies analyst Brent Thill. Thill sees the expansion of their digital advertising business as a key driver bringing in a potential revenue of $22 billion by 2022, up from $4 billion in 2017.
Amazon offers a range of products and services through its websites. The company operates through three segments: North America, International and Amazon Web Services (AWS). The company’s products include merchandise and content that it purchases for resale from vendors and those offered by third-party sellers. It also manufactures and sells electronic devices.

In 2017, we saw Amazon acquire 11 companies, further accelerating their growth. One of the most notable acquisitions was Whole Foods Markets, a supermarket chain that specialises in selling food products without artificial preservatives, colours, flavours, sweetener and hydrogenated fats. The deal cost Amazon around $13.7 billion and shows the company’s plans to expand into different sectors. Whole Foods has 473 stores in the United States, Canada and United Kingdom.
We are barely three months into the new year and we have seen Amazon already make their first acquisition. Last month, the tech giant purchased the Ring (formerly Doorbot) – a global home security company. The deal is rumoured to be worth between $1.2 to $1.8 billion.
Amazon are also planning to bid for the rights to stream major sporting events such as, the English Premier League, NFL (National Football League), MLB (Major Baseball League) and NHL (National Hockey League) to attract more people to subscribe to the Prime membership. With the American league (NFL, MLB and NHL) deals set to expire in 2021, it will be the first time for Amazon and other major tech streaming platforms to bid for the rights against the traditional media companies.
In 2017, we saw the Amazon share price rise about 53% and this year we have already seen the price rise by 28%. Further expansion into different sectors will certainly help Amazon’s performance moving forward and reach the $1 trillion market cap sooner rather than later.

Source: Tradingview

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