From its humble origins, Amazon has made its CEO, Jeff Bezos, a multibillionaire thanks to the success of the company’s stock. Of course, with success comes high expectations, and even Amazon is not immune to the opinion of analysts and stock market investors. After the company disappointed investors with its third-quarter earnings release in October 2019, the stock initially shed over 9% of its value, resulting in a paper loss of over $7 billion on that day. But Amazon stock is still the third-largest in terms of market cap, behind only Apple and Microsoft.
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||$1,307.00-$2,035.80|
|Amazon Market Cap, 52-Week Range||$646,520,620,000- $1,007,028,828,000|
|GOBankingRates’ Evaluation of Amazon’s Net Worth||$160,467,333,333|
|All information on the 52-week range is accurate as of Oct. 30, 2019.|
|CEO Jeff Bezos Net Worth||$111 billion|
One of the most reliable gauges for what a company is worth is its market capitalization, otherwise known as market cap. The market cap is the value of all of the company’s stock combined, which mirrors what investors are willing to pay for a piece of the pie. Amazon’s market cap has ranged between $646.5 billion and $1.007 trillion over a 52-week period.
Although market cap gives you a clear sense of the company’s market value, it’s based entirely on market sentiment — essentially reflecting the ever-changing opinions of investors, which changes from hour to hour. The GOBankingRates Evaluation, on the other hand, 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 $160.47 billion.
The fact that this number is much lower than Amazon’s market cap reflects the hard decision any investor has to make before deciding to purchase stock from companies like Amazon. The company is growing quickly and the large market cap indicates that investors are willing to pay more for Amazon’s potential future, despite its current revenue and profits not quite warranting the price.
For more conservative investors, Amazon’s current price will likely seem outrageous, considering the stock has fallen more than 10% from its all-time high. However, more forward-looking investors who are ready to take a chance on Amazon’s continued growth might be willing to pay a premium. Only time will tell which decision is best, but the stock made a nearly 500% gain — from $299.07 a share to $1,777.08 — from Oct. 30, 2014, to Oct. 29, 2019, meaning the less conservative approach would have brought huge returns during that period.
Amazon’s CEO, Jeff Bezos, is also its founder and chairman. Although he had to temporarily give up the title of “world’s richest man” thanks to his well-publicized divorce in 2019, he quickly regained the title while still maintaining a net worth of over $100 billion due to his nearly 12% stake in the company. Institutionally, the five largest shareholders are the Vanguard Group Inc., BlackRock Fund Advisors, SSgA Fund Management, Fidelity Management & Research and T. Rowe Price Associates. Vanguard owns over 30 million Amazon shares, and the remaining top five own more than 15 million shares each.
Bezos worked at a hedge fund before he left the business to found Amazon in 1994. He used books as a starting point for the company and later expanded Amazon into an online retailer for almost any product.
Learn more about 10 stocks like Amazon that are gifts that keep on giving.
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John Csiszar contributed to the reporting for this article.
Methodology: The GOBankingRates Evaluation assesses a company’s net worth based on the company’s total assets, total liabilities, 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.
Information is accurate as of Oct. 30, 2019, unless otherwise noted.