Last year, Amazon generated a revenue of $178 Billion which is more than 30% of their 2016’s revenue. Not just that, their all three segments have also increased the sales with Amazon Web Services (AWS) being the most profitable segment which only contributed almost 10% of their revenue, i.e. $17.46 Billion.
And if you compare the sales of Amazon from last five years, you can see an increase of $100 billion. And hopefully, this year Amazon would possibly be getting revenue of $200 billion.
Besides that, many investors think that Amazon also become a trillion dollar company this year. But Amazon is not only in this race as corporation like Apple and Alphabet run for the same goal. Amazon currently at the fourth position with $700 billion in the top market cap race with Apple being at the top holding a market cap of $850 billion.
Microsoft has the same market cap as of Amazon and could be proved a competitor for other companies. While Google is sitting at the second position with $720 billion. Recently, Amazon overtook Alphabet in market cap’ but then it went down by Trump’s attacks.
So, even though Amazon is the 4th position, why many people believe Amazon being first trillion dollar company?
Strong Position in Business
Amazon business strategy is what makes the company better than others. Amazon is currently one of top strong companies of the world which is also affecting the other industries as well. With its inception, Amazon has spread their wings to many other services which many people don’t aware of.
Amazon has more than 40 subsidiaries and annually the number keeps increasing. Amazon has been acquiring the company with more speed and with more money than ever. The last year’s Whole Foods acquisition is the top proof of it. And recently, they purchase doorbell maker Ring for $1 billion with is the first acquisition of 2018 and there remains the rest of the year.
Not just Amazon buys but transform a company with its services like after purchasing Whole Foods, it provides online shopping and delivery, price cuts, involvement of prime deals etc. The sales of Amazon also got increased after acquisition. So, it means that the acquisition is becoming successful.
Besides acquisition Amazon investing money many things to make more money. The company experienced the record breaking sales in India last year which makes the company to invest $443 million more to make the market more successful. Also, they are planning to give loans to seller to increase the number of seller in India.
Giving more and more services
For many years, Amazon was just a e-commerce platform where you can purchase a lot of things. But now the company gives more services like their streaming services Prime Video and Prime Music.
Amazon knows the potential of entertainment industry which makes Netflix such a big success despite having top players such as Disney, HBO, Universal, Fox Studio etc.
Amazon now goes hand-on-hand to Netflix and other streaming service to give the most likable content to their customers. However, Amazon is new in this industry but certainly it knows which movie and tv series people like. The famous movie rating site IMdb is owned by Amazon which they use to choose the movie and tv shows for their customers. Also, certain features like X-Ray in prime video gives them an upper hand.
Amazon has now their own studio too, i.e. Amazon Studios and they have also made content and they are also planning for the big budget shows too. Earlier we found that Amazon is going to make Game of thrones like TV series for $1 billion dollar based on Lord of the Rings which we shifted to a sci-fi show recently. So, gradually the subscription is increasing and still the number is greater than Netflix.
Amazon is also supposed to be working on logistic services too. And last year, they also released their Key service which makes a person to drop a package inside the house for safety purposes. The purpose of purchasing Ring could be improving this service.
The success secret of AWS of Alexa
Amazon has been working on cloud services for quite some time and over this period they made several big customers, Netflix for an example. Their AWS segment’s revenue of $17 billion, they made more than $4 billion operating income which is more than $106 billion’s North America sales and $54 billion’s International sales. So, AWS is giving quite a profit to Amazon and the chances are that the number will be increasing for sure.
Besides, Amazon is also focusing on making their personal assistant smarter than ever. They are seeking new minds in this domain for their AI assistant which is happened to be one of the best personal assistant in current times. Moreover, they are involving Alexa to many places like it’s come with Echo speaker, Prime Music app etc. American Exchanges has started to make a pay using Alexa. And it is believed that BMW cars will be voice controlled by Amazon’s PA. The future will be of Artificial Intelligence and if Amazon get succeed in making their AI smart, they will surely be benefited by it.
Tremendous Growth in Share Price
Amazon saw a huge growth in their share price hence it market cap in last some years. Well, it is not the only company which market cap is growing but the rate matters. And certainly, Amazon is growing faster than others.
If we talk about 1 April, 2017, Amazon stock was around $900 and now it increased by 63%.
If you see the 52-wk high which is more than $1600 which make it market cap around $770 billion. The last April’s first week, it was $435 billion.
On the other hand, Apple stock price was $143.66 at the same time which is now increased by 16%.
As per it 52-wk high, Apple highest market cap would be $920 billion which is just nearby the target but currently it downgraded to $850 billion. The last year at the same time their market cap was $724 billion.
Google is also a potential competitor for both companies as they are also making progress and in many fields. As per the share price, Google has grown with a good margin. The share price in the last year was $830 which now increased 24%.
Google is also running low at current time as per their 52-wk high which makes their market cap $825 billion. The last year they market cap was $580 billion which means they have grown a long.
The growth rate vividly shows that Amazon is growing much faster than both companies and the growing business also makes Amazon a potential contender among them.