On Monday, June 4, Amazon.com Inc.’s stock surged nearly 1.5 percent — pushing the company’s market cap to $806 billion and rising.
E-commerce giant Amazon has come a long way, growing from an online bookseller in the early days of the internet to a retail giant that is disrupting everything from the assumed supremacy of big-box stores like Walmart to grocery store and delivery service models. The company boasts a large range of services and deals, the largest of which is the members-only Prime Day event. Coresight Research estimated that the 36 hours of Prime Day discounts and sales on July 16 and 17 will bring in about $3.4 billion for Amazon, but a series of strikes by European Amazon workers and an international boycott of the event could affect the overall earnings.
Here’s a closer look at what the company is currently worth and why that might — or might not — matter to investors:
|What Amazon Is Worth|
|Amazon Share Price, 52-Week Range||$927-$1,665.27|
|Amazon Market Cap, 52-Week Range||$448.8 billion-$806 billion|
|2017 Revenue||$177.9 billion|
|2017 Profits||$3 billion|
|GOBankingRates’ Evaluation of Amazon’s Net Worth||$107.9 billion|
|All information on 52-week range is accurate as of June 1, 2018.|
|CEO Jeff Bezos Net Worth||$137.3 billion|
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Amazon Market Cap: $448.8B-$801B
One of the most reliable gauges for what a company is really worth is market capitalization, or market cap for short. The market cap is the value of all of the company’s stock combined, giving you a sense of what value investors are placing on the company based on the price it is trading at. Amazon’s market cap has ranged between just under $450 billion and just over $806 billion from May 2017 to early June 2018, but that has been trending up sharply.
Amazon Net Worth: $107.9B
Although market cap gives you a clear sense of what the market values a company at, it’s based entirely on market sentiment — essentially reflecting the ever-changing opinions of investors — and it changes from hour to hour. The GOBankingRates Evaluation, however, calculates a company’s net worth based solely on measurable figures like assets and revenue. It’s a more conservative valuation taking into account only full-year profits and revenue from the last three years and the company’s assets and debts.
Based solely on Amazon’s revenue and profits from the last three years, Amazon is worth just $107.9 billion.
The fact that this number is so much lower than Amazon’s market cap reflects the decision that any investor has to make about a company like Amazon before deciding to purchase stock. Amazon is a fast-growing company, and the large market cap indicates that investors are willing to pay more based on its potential for future earnings even if its current revenue and profits don’t quite warrant the price.
So, if you’re a more conservative investor, Amazon’s current price is likely going to seem outrageous to you. If you’re more forward-looking and ready to take a chance on Amazon continuing to grow, however, you might be willing to pay a premium. Only time will tell who’s right, but the stock made a more-than 500 percent gain from $253.90 a share to $1,582.26 from May 2013 to May 2018, meaning the less conservative approach would have meant huge returns for that period.
How Jeff Bezos Is Driving Amazon’s Growth
Amazon’s CEO, Jeff Bezos, is also its founder and chairman. His nearly 80 million shares constitute 16 percent ownership of the company as a whole and represent over $125 billion of his total net worth, which Forbes reports at $137.3 billion. The rest of the five largest shareholders are the Vanguard Group Inc. and Blackrock Inc. — with each owning more than 24.5 million shares — and FMR, LLC and T. Rowe Price Associates Inc. — with each owning over 17 million shares.
Bezos worked at a hedge fund before he left the business to found Amazon in 1994. He used books as a starting point before he expanded Amazon into an online retailer for almost any product. In 2018, he was ranked by Forbes as the wealthiest man in the world.
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Methodology: The GOBankingRates Evaluation assesses a company’s net worth based on the company’s total assets, total liabilities, and revenue and net income from the last three years. Base value is established by subtracting total liabilities from total assets from the company’s last full fiscal year. Income value is established by taking the average of the revenue from the last three full fiscal years, 10 times the average of the net profits from the last three full fiscal years, and then calculating the average of those two figures. The final GOBankingRates Evaluation number is the sum of the base value and the income value.