A thesis was done by MKM’s analyst Rob Sanderson about the worth Amazon.com Inc. of by the mid-2020s. According to this study Amazon will be worth at least $1.6 trillion by the middle of the next decade. The analyst stated that this thesis valuation was actually a conservative one, with the assumption that the company’s growth would slow down in the next decade vis-à-vis its growth in the last nine years. Amazon has grown 900% in the last 9 years. According to Sanderson, this growth will probably slow down to 300%.
The company’s worth was calculated on its current performance. Amazon’s retail business has already swallowed up 15.5% of the US retail market. This was also thanks to Amazon’s $13.5 billion acquisition of Whole Foods Market Inc. Currently, Walmart is the market leader in the supermarket and grocery segment with a market share of 14.45%. Whole Food has a tiny market share of 1.21% and Amazon has a market share of 0.19%. However, with the acquisition, experts predict that the company will become one of the top 5 grocers in the industry within the next 5 years.
Another big step towards that $1.6 trillion valuation is Amazon’s Web Services’ cloud-computing division. This division as grown by a whopping 20% per year. Amazon Web Services (AWS) sells remote computing services to businesses. And it is currently the star of Amazon’s revenue generators. AWS is today considered one of the most valuable tech start-ups in the market. AWS already has taken more than 40% of the market share in cloud computing and doesn’t seem to be stopping any time soon.
But it’s not just the company’s growth in the US. Amazon.com’s international retail business is also expected to grow exponentially and be at least as valuable – if not more – than its local counterpart. With more companies relying on cloud computing, AWS is expected to be an international market leader.
With the latest announcement by Amazon that it plans to open a second headquarters in North America, the company’s stock prices are expected to shoot up further. These headquarters are expected to be on par with the company’s current headquarters in Seattle. Amazon will invest $5 billion in the construction of the headquarters.
When Amazon opened its headquarters in Seattle, it created tens of thousands of jobs, and it is estimated that the company contributed approximately $38 billion to the city’s revenues. With the new headquarters, Amazon is expecting to create another 50,000 more jobs and generate a huge amount of revenue for the city it builds its headquarters in. While there are no confirmations from the company, rumor has it that the next headquarters might be located in Washington DC.
Amazon is today one of the world’s most valuable companies. It ranks first in Fast Company’s “Most Innovative Companies” list, second on Fortune’s “Most Admired Companies” list, first on Harris Poll’s “Corporate Reputation” survey list and second on LinkedIn’s “Most Desirable Company” list. Amazon was also ranked amongst the best company for the Military Times’ “Best for Vets” list. Amazon has been paying back the nation by providing employment opportunities for the country’s military veterans. These intangibles make an impact on a company’s value too.
Most analysts agree that Amazon can do much better and that the company is only going one place and that is up. 39 of 45 analysts have given the company a “buy” rating. The company’s share prices according to them is expected to go up to $1,154.39. That is more than 19% of the Amazon’s closing price of $965.90 on Friday.