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Business
31 May 2017

Amazon's $1,000 share price is a signal of changing times

If someone had walked into Amazon's first day of trading in May 1997 and spent $100 on Amazon, that person would have been richer by $50,000 now.

The e-commerce giant broke the ceiling by reaching a valuation of $1,000 per share, making its market capitalization around $478 billion, just behind Apple, Alphabet, and Microsoft, which are predominantly tech companies.

Here's all about it.

In context

Amazon is the new darling of bullish investors
The bet is on the future

Smartmoney

The bet is on the future

This jump into the elite club shows that investors are rallying behind the e-commerce giant even if its $724 million in quarterly profit sounds feeble on the backdrop of $35.7 billion in sales; what attracts them is the possibility of what Amazon can achieve in future.

To them, Amazon is at the helm of online shopping and investors want a piece of that pie.

Change

The old behemoths have crumbled

In US, Amazon has weakened traditional retail institutions like Borders, Macy's, Radio Shack. When people had to walk through their doors to buy stuff, Amazon was flaunting its "one-day-delivery" option and massive online inventory.

Amazon's video streaming service is also doing brisk business along with its growing business of leasing online storage and computing technology.

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Investing on online space is now immensely lucrative

Online

Investing on online space is now immensely lucrative

This milestone marks how investors are putting their bets on new-age companies rather than the brick-and-mortar establishments.

Facebook and Alphabet are also grabbing eyeballs as they are slowly taking over advertisement deals, which earlier used to go to newspapers or TV stations.

Netflix is expanding boisterously, thanks to its burgeoning Internet subscriber growth; while Apple is also dipping its toe in India.

Buffet

Pulling one over the Prophet of investment

Just to put things into perspective; Amazon is now 17% bigger than Berkshire Hathaway, which is run by Warren Buffet aka the Oracle of Omaha and has fingers in every major business in the US territory.

Google's parent company Alphabet, is also expected to hit the coveted $1,000 mark soon, as its shares closed at $996.17, up $2.90 on Tuesday.

India will decide

Challenge

India will decide

The upheaval also makes Jeff Bezos a very rich man, considering the fact that he holds about 17% of outstanding Amazon shares, this would make his net worth about $80 billion in the present.

What is left to be seen is whether Amazon replicates its success in the Indian context or gets a reality check in the next financial results.

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