Amazon is one of the most — if not the most — well-known names in the e-commerce industry. With its fast and convenient delivery, reliable customer service and perk-filled Amazon Prime membership, it’s an e-commerce giant to be reckoned with despite its humble beginnings as an online bookstore.
Now with a huge competitive edge in its core services, positive investor sentiment and visionary leaders like CEO Andy Jassy and founder Jeff Bezos, it’s easy to understand why this company is one of the most valuable in the world.
Amazon: Company Snapshot
How Much Is Amazon Worth Now?
Amazon positioned itself as a lifeline for millions of consumers during the pandemic, but it was a powerhouse long before that. It’s one of a few companies to have reached $1 trillion in market capitalization — a milestone it achieved for the first time in 2018.
In June 2022, Amazon split its stock 20 for 1, meaning that for every share an investor owned, they received 20 shares at a pro-rated price. As a result, Amazon no longer trades for thousands of dollars per share. With a 52-week low share price of $81.43 and a high of $170.83 as of March 17, Amazon’s market capitalization has fluctuated over the last year. At its closing share price of $98.95 on March 17, the company’s market capitalization sits at $1.01 trillion.
What Is Market Capitalization?
Market capitalization is often used by investors to determine a company’s value. To calculate market cap, multiply the number of outstanding shares by the current stock market price. Although market capitalization can help determine a company’s value, it’s not always the most accurate. It does not take into account a company’s financials. Share pricing can fluctuate, affecting the figure.
Take a look at three areas that contribute the most to Amazon’s true valuation:
- Economic moat and competitive advantages
- Market cap, revenue and outlook
- Leadership and executive team
What Is Amazon’s Net Worth?
Amazon’s net worth as of the quarter ending Dec. 31, 2022, was $460.98 billion. To calculate this, GOBankingRates took into account only full-year profits and revenue from the last three years and the company’s assets and debts.
|What Is Amazon Worth?|
|Share Price, 52-Week Range||$81.43 -$170.83|
|Fiscal Year 2022 Revenue||$513.98B|
|Fiscal Year 2022 Profit||-$2.72B|
|GOBankingRates’ Evaluation of Amazon’s Net Worth||$460.98B|
Amazon is one of the few companies to have hit a trillion-dollar market cap. In 2020, after a great earnings report, the company made a return to the $1 trillion club, joining the ranks of Apple, Microsoft, Alphabet — the parent company of Google — and, intermittently, Tesla. Amazon’s revenue in 2022 was $513.98 billion, up 9% from $469.82 billion in 2021 and increasing by orders of tens of billions yearly.
Amazon’s stock now sits 16% above its 52-week low of $81.43 per share, bringing the market cap to $1.01 trillion as of March 17 — having recovered after dipping below $1 trillion last November.
Although fourth-quarter earnings-per-share were $0.03, the company posted -$0.27 earnings for the year. Amazon, like fellow tech giants Apple and Alphabet, have experienced slowed growth amid a challenging economy.
Amazon’s Economic Moat and Competitive Advantages
An economic moat, a concept successful investor Warren Buffett and CEO Bill Gates use to invest, occurs when a company has a huge market advantage over its competitors. Buffett would typically invest in a company that has an economic moat, but Amazon has more than one.
A Look at Amazon’s Many Moats: Prime, Logistics and More
Although existing competitors can do bits and pieces of what Amazon does, Amazon’s core e-commerce business and logistics ability are economic moats. As such, there will be no competition that can match it in its entirety anytime soon.
The most obvious is Amazon’s Prime membership, which is all-encompassing in addressing customer needs. From free, fast shipping, to Prime Entertainment, to the Amazon Prime credit card, Prime membership is a large contributor to Amazon’s value. It feeds into itself, keeping customers hooked on both shopping with Amazon and paying the monthly or annual subscription for the 5% credit card rewards.
To accomplish its shipping speeds, Amazon also maintains an economic moat in logistics. Its Fulfillment By Amazon business that connects to its Marketplace and Prime — its other moats — leverages its large-scale operation to solve inefficiency and cost. This moat leaves Amazon well positioned to ride out the pandemic-spurred supply chain issues challenging manufacturers and retailers.
This is not to mention Amazon’s competitiveness in many other areas. Among the more successful of these are Prime Video — a streaming service that competes with Netflix and comes bundled with a Prime membership — and cloud computing services like Amazon Web Services, which competes with Microsoft Azure.
AWS is in the spotlight for its decisive market dominance. As of the fourth quarter of 2022, AWS had 32% of the cloud provider service market share, while Microsoft Azure had roughly 23% and Google Cloud had 10%, according to Statista.
The Positive Business Effects of COVID-19
Amazon’s revenue and worth grew during the pandemic as Amazon stepped up to the plate amid the increased online buying. The company’s net sales grew 9% in the fourth quarter of 2021 compared to the same quarter of 2020 and surged 22% for the year.
To keep retail sales strong, Amazon pushed Prime Day forward to Q2, giving consumers a head start on holiday shopping. And the push continued, resulting in Amazon’s most successful Black Friday to Cyber Monday sale ever, in terms of both its own retail sales and those of its third-party sellers.
Due to its great success in emerging as a reliable top player in the pandemic, along with many other companies that came out on top, Amazon’s stock climbed higher. However, the outsized consumer demand that drove Amazon’s remarkable growth tempered in 2022 with consumers’ return to stores and economic factors like inflation, increasing interest rates and the threat of recession.
Amazon’s Founder: Jeff Bezos
Jeff Bezos walked away from his career as an investment banker to open Amazon, an online bookstore, out of his garage. He managed to expand beyond books by diversifying into other retail products including music CDs and electronics, such as Kindle. He also introduced the Amazon Web Services — AWS — division, which has become the largest cloud-computing service in the market.
Amazon’s CEO: Andy Jassy
Andy Jassy, president and CEO of Amazon.com, took the helm in July 2021. He’s the founder of Amazon Web Services and served as its CEO for over five years before replacing Bezos as CEO of Amazon. As part of his initial compensation package, Jassy received 61,000 shares of Amazon stock, worth over $6.04 million at today’s price, vested over a 10-year period. That’s in addition to the 0.02% of Amazon stock he owned previously, CNBC reported.
Top 10 Shareholders
Amazon is primarily held by institutions. The top 10 firms are:
- The Vanguard Group Inc., 6.95% of shares
- Blackrock Inc., 5.8% of shares
- State Street Corp., 3.28% of shares
- FMR, LLC (Fidelity), 2.91% of shares
- T. Rowe Price Associates Inc., 2.13% of shares
- Geode Capital Management LLC, 1.58% of shares
- Morgan Stanley, 1.38% of shares
- JPMorgan Chase & Co., 1.12% of shares
- Norges Bank Investment Management, 0.96% of shares
- Northern Trust Corp., 0.92% of shares
How Does the Future Look for Amazon?
Though Jeff Bezos has stepped down, someone just as competent and ambitious filled his shoes. Having been at Amazon for 25 years — from the very beginning, when it was a tiny startup with no office — Jassy is just as much a visionary as Bezos, who has stayed on as an advisor and board member.
Factors Affecting 2023
In its fourth-quarter and year-end 2022 earnings report released on Feb. 2, Amazon named a number of factors that could have an unpredictable effect on business in 2023. They include pandemic impacts, exchange-rate fluctuations, global economic and geopolitical conditions, changes in consumer demand and spending, inflation and interest rates, as well as labor and supply-chain constraints.
However, the company still expects 4% to 8% growth in the first quarter compared to the first quarter of 2022. Operating income could meet or exceed last year’s $3.7 billion for the first quarter.
Costs and Growth
Amazon is focused on reducing operating costs amid the economic uncertainty it expects to impact business in the short term. But in a statement accompanying the earnings release, Jassy said he expects “significant growth in the coming years” as retail and information technology continue to shift from physical stores and datacenters.
“When you also factor in our investments and innovation in several other broad customer experiences (e.g. streaming entertainment, customer-first healthcare, broadband satellite connectivity for more communities globally), there’s additional reason to feel optimistic about what the future holds,” Jassy said.
Highlights from Q4 2022
The press release accompanying Amazon’s earnings reported pointed out some highlights of the last quarter:
- Amazon announced new commitments and migrations from AWS customers including Nasdaq, NFL, Yahoo Ad Tech, Duke Energy and American Family Insurance.
- AWS Regions expanded to 96 Availability Zones and announced plans to launch 15 more, plus five additional AWS geographic Regions, bring that total to 35.
- Amazon launched a long list of new products and services, including the Sparrow robotic fulfillment center, Amazon Clinic virtual health services and an augmented reality shopping experience in partnership with Snapchat.
- Amazon had a record-breaking holiday season that generated more than $1 billion in sales in the five-day Black Friday and Cyber Monday weekend.
- Amazon Prime’s biggest debut ever, “The Lord of the Rings: The Rings of Power,” attracted more than 100,000 viewers.
- Prime Video finished the NFL “Thursday Night Football” season with an 11% increase in viewership and the youngest median view age of any NFL broadcast package since 2013.
- Amazon announced success in employee initiatives, such as Career Choice training, inclusiveness initiatives for deaf and hard-of-hearing employees and a mentoring program.
Despite the strength in sales, Amazon experienced a modest $278 million profit for the quarter and a $2.72 billion loss for the year. It, like other Big Tech companies, has struggled in a challenging economic environment and is also feeling the effects of having to scale back following pandemic-era expansion. It has paused work on its second headquarters, located in Virginia, as a result.
In addition, “the company last year froze most corporate hiring and began a round of layoffs that will ultimately total about 18,000 workers,” Bloomberg reported. However, according to media reports of a leaked audio recording from a company town hall, Amazon might eventually hire back some of those who’ve lost their jobs.
Good To Know
Despite its current struggles, Amazon likely has a bright future as it continues to dominate online retail and cloud services, maintains a strong showing in online media, home automation and other products and services — and just as importantly, continues to make Amazon a better place to work.
Is Amazon Worth the Money?
Despite some bumps due primarily to the post-pandemic economy, Amazon could be a solid long-term investment. Among 44 analysts weighing in on Nasdaq, the consensus rating is “strong buy.” The average price target for the next year is $136.86 in a range of $106 to $192. At a current share price of $92.12, the stock has very solid potential.
Data is accurate as of March 19, 2023, and is subject to change.
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, plus 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.
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