Amazon’s stock hits $1,000 milestone
A $1,000 investment on company’s first day of trading in 1997 would be worth more than $500,000 today
SEATTLE— Amazon.com Inc.’s shares topped $1,000 for the first time, marking a new milestone for a company wooing investors by dominating online commerce and cloud computing, two industries expected to keep growing as shopping habits change and businesses rethink how they deploy technology.
Amazon shares hit $1,001.20 (U.S.) in New York Tuesday, up about 40 per cent from a year ago and more than double the 15-per-cent gain of the S&P 500 Index in the same period.
A $1,000 investment on Amazon’s first day of trading in 1997 would be worth more than $500,000 today, according to The Associated Press.
Investors are thinking about how much further Amazon can grow as it tries to replicate its U.S. success abroad.
The shares will likely push even higher since Amazon is growing so quickly in massive global industries that show no signs of slowing, said John Blackledge, analyst at Cowen and Company LLC, who recently upped his Amazon price target to $1,125 a share.
“There’s a long runway there,” he said. “The markets Amazon is playing in with global retail and cloud computing are just massive. Things continue to go well and investors are looking for more upside.”
The Seattle company’s $478-billion market value is double that of WalMart Stores Inc. even though the world’s biggest retailer will have sales three times larger than Amazon’s this year.
Investors put more value in Amazon’s web traffic and delivery network than they do in Wal-Mart’s vast store presence because online spending will grow more than four times faster than overall retail spending this year as shoppers continue to shift from stores to websites, according to EMarketer Inc.
The world’s largest online retailer is dominating e-commerce with its paid Amazon Prime subscription, which includes delivery discounts, music and video streaming and photo storage that keep shoppers engaged with the website.
Seattle-based Amazon had 80 million Prime subscribers in the U.S. as of March 31, an increase of 38 per cent from a year earlier, according to Consumer Intelligence Research Partners. Amazon has been tackling retail one category at a time, disrupting bookstores and electronics stores first and more recently pushing into apparel and groceries.
Its rise has coincided with the decline of prominent retail chains such as Macy’s Inc. and Sears Holdings Corp., which have shuttered stores and laid off workers in response to declining sales.
Another Amazon advantage is its profitable and fast-growing cloudcomputing division Amazon Web Services, which maintains a global network of data centres and rents out storage space and computing functions to clients in a variety of industries, including Netflix Inc. and Airbnb Inc. as well as Capital One Financial Corp. and the federal government.
This year, companies around the world will funnel $246.8 billion to Amazon and other cloud services providers, according to Gartner, up 18 per cent from 2016.
Amazon just beat Alphabet Inc. to the $1,000 level, with Class A shares just $2 short of $1,000 Tuesday.
Amazon’s rise has made its founding chief executive officer Jeff Bezos the world’s second wealthiest person, behind only Microsoft Corp. co-founder Bill Gates, according to the Bloomberg Billionaires Index.