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Tuesday, 4 September 2018

Amazon Finally Joins The Trillion Dollar Club

Amazon Finally Joins The Trillion Dollar Club

Jeff Bezos, Amazon.com founder: company joins Apple Inc in the trillion dollar club

Amazon has achieved another milestone in its history by crossing the $1 trillion club, becoming the second member of the group after its stock price doubled in 15 months.

Amazon.com Inc  on Tuesday joined Apple Inc in the  $1 trillion club, becoming the second member of the group after its stock price doubled in 15 months.

If the online retailer’s share price continues at its recent pace, it will be a matter of when, not if, Amazon’s market valuation eclipses that of iPhone maker Apple, which reached $1 trillion on Aug. 2.

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Apple took almost 38 years as a public company to achieve the trillion dollar milestone, while Amazon got there in 21 years. While Apple’s iPhone and other devices remain popular and its revenues are growing, it is not keeping up with Amazon’s blistering sales growth.

Amazon has impressed investors by successfully diversifying its business into virtually every corner of the retail industry, altering how consumers buy products and putting major pressure on many brick-and-mortar stores.

It also provides video streaming services and bought upscale supermarket Whole Foods. And its cloud computing services for companies have become a major driver of earnings and revenue.

“Amazon’s a little bit more dynamic than Apple because the iPhone has become more mature. Amazon’s cloud business is an extra growth driver that Apple doesn’t have,” said Daniel Morgan, portfolio manager at Synovus Trust in Atlanta, Georgia who describes Amazon’s cloud services as its “crown jewel.”

In the second quarter the unit accounted for 55 percent of Amazon’s operating income and 20 percent of total revenue, according to Morgan.

Apple started trading in December 1980 but its stock did not truly start to take flight for another 25 years, spurred by the iPhone, the breakthrough device that left competitors in the dust.

Amazon – founded as an online book-retailer in Chief Executive Jeff Bezos’ garage in 1994 – started trading on May 15 1997 at $1.50 on a split-adjusted basis.

By October 2009 it had risen to $100 and the stock hit $1,000 for the first time on May 30, 2017. It has held above that level since October 27, 2017.

Just 10 months later, on Aug. 30, Amazon shares hit $2,000 for the first time, just $50 per share away from giving the company a $1 trillion market value. That milestone, just a month after it reached a $900 billion valuation threshold.

Amazon shares were last up 1.1 percent at $2,035.69, pulling back slightly from the milestone level of $2050.2677.

Amazon currently trades up 74.0 percent for the year to date. In comparison, Apple has risen about 34.7 percent year to date.

Analysts expect Apple’s revenue to jump 14.9 percent in its fiscal year ending in September, according to Thomson Reuters data, a hefty rise but still far short of Amazon’s expected revenue growth of 32 percent for 2018.

-Reuters

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