Ama­zon stock at $1169.47 a share

Jeff Be­zos now rich­est per­son in the world

The Star Late Edition - - COMPANIES - Ka­belo Khu­malo

THE MAR­KET cap­i­tal­i­sa­tion of Jeff Be­zos’s Ama­zon is set to breach the $1 tril­lion (R11.82trln) mark within the next two years as the group’s “fly­wheel” busi­ness model gains fur­ther steam.

Daniel Ives, the head of tech­nol­ogy re­search at GBH In­sights, yes­ter­day told Busi­ness Re­port that Ama­zon had a unique op­por­tu­nity to dou­ble down on its con­sumer and en­ter­prise ini­tia­tives for 2018 and drive sig­nif­i­cant cash flow for the com­ing years.

“We be­lieve Ama­zon will hit a tril­lion-dol­lar mar­ket cap over the next 12 to 18 months as the com­pany’s con­sumer fly­wheel, fur­ther mon­eti­sa­tion of the in­ter­na­tional mar­ket op­por­tu­nity, and sum of the parts val­u­a­tion is golden tri­fecta to get there. Be­zos has built an iron fortress around the con­sumer with show­ing no signs of slow­ing down in 2018 and be­yond,” Ives said.

Be­zos last week leapfrogged Bill Gates as the rich­est per­son in the world af­ter his wealth dou­bled to more than $110 bil­lion on the back of the Ama­zon stock surge.

The group, which is the sec­ond-largest pri­vate em­ployer in the US, with 541 900 peo­ple, saw its stock hit $1 000 in May last year and fin­ished 2017 at $1 169.47, up 56 per­cent on the year. On track Ives said his firm had raised the group’s price tar­get from $1 500 to $1 850, adding that Ama­zon was on track to com­prise 50 per­cent of all US e-com­merce spend­ing by 2019, up from 44 per­cent in 2017.

The com­pany’s mar­ket cap­i­tal­i­sa­tion has also risen from $114bn in 2012 to more than $760bn yes­ter­day.

Ama­zon is renowned for per­form­ing ex­cep­tion­ally ef­fi­ciently mea­sured against rev­enue per vis­i­tor, which is one of the key mea­sures for any com­mer­cial web­site. Ama­zon’s cloud com­put­ing busi­ness run by Ama­zon web ser­vices (AWS) has made great strides in re­cent quar­ters.

AWS gave Ama­zon $5.1bn in rev­enue in the fourth quar­ter of last and raked in $17.4bn in 2017 as a whole, up from $12.2bn in 2016. AWS has grown in leaps and bounds over the past few years. In the fourth quar­ter of 2014, AWS con­trib­uted al­most 5 per­cent of Ama­zon’s rev­enue, while this jumped to 8.5 per­cent in the fourth quar­ter of 2017.

The group last month also over­took Google as the world’s most valu­able brand. The Brand Fi­nance Global 500 val­ued the e-com­merce gi­ant’s brand value at $150.8bn, an in­crease of 42 per­cent com­pared with 2017.

Ap­ple de­fended its sec­ond place in the rank­ing, with brand value re­bound­ing to $146.3bn af­ter the 27 per­cent de­cline last year.

Google dropped from first to third po­si­tion, record­ing a rel­a­tively slow brand value growth of 10 per­cent to $120.9bn.

Brand Fi­nance noted that for the first time since the in­cep­tion of its Global 500 study, tech­nol­ogy brands claimed all top five places in the league ta­ble. Sam­sung was ranked fourth with a brand value of $92.3bn and Face­book took the fifth po­si­tion with its brand val­ued at $89.7bn.

The Google-owned YouTube more than dou­bled its brand value to $25.9bn, jump­ing 70 places to 42nd.

The list also saw Chi­nese tech­nol­ogy brand boast high brand value growth, with Alibaba ranked num­ber 12, Ten­cent tak­ing the 21st po­si­tion, grow­ing its brand 83 per­cent to $40bn. An­other Chi­nese com­pany fea­tured in the top 50 was WeChat with a brand value of $22.4bn.

Asief Mo­hamed, the chief in­vest­ment of­fi­cer at Aeon In­vest­ment Man­age­ment, said the at­trac­tion of Ama­zon, Ap­ple, Al­pha­bet, Ten­cent and Face­book to in­vestors were re­turns that were con­sis­tently above av­er­age.

Mo­hamed said in­vested cap­i­tal that these com­pa­nies have achieved would most likely in­crease in the fu­ture. “These com­pa­nies gen­er­ate strong cash flows and re­quire very lit­tle cap­i­tal in­vest­ment in ex­pen­sive in­fra­struc­ture,” he said.

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