In the annals of investing, only a few companies get to cross stock price levels that are headline-inducing and psychologically pleasing (investors long for those companies). Amazon joined that club, intraday on Tuesday (May 30), when its common shares crossed $1,000 (changing hands at $1,001.20), a first ever for the company.
As Bloomberg News noted, the stock, which gave back a smidgen of its gains to close the day at just above $996, reflects excitement over eCommerce prospect. Enthusiasm can be measured in relative outperformance, and the stock is up 40 percent in the past year, far above the 15 percent posted by the S&P Index in the past 12 months.
The company has been boosting its presence abroad, and one analyst, John Blackledge, with Cowen and Company said the stock could go to $1,125. The key to growth, according to the analyst and as noted by Bloomberg, is the retail and cloud focus, which for Amazon, writ on a global basis, offers a “long runway” to continued momentum.
Among many initiatives: $99 a year Amazon Prime memberships and 80 million subscribers (a customer base that grew 38 percent from a year ago). In addition, the long runway just noted is based in part on an eCommerce market that is seeing expansion at four times the rate of traditional bricks-and-mortar retail.
Thus, growth wins out over size, perhaps, as Amazon’s $478 billion market cap is twice that of Walmart’s, which has twice the top line of the tech firm. Amazon has also been branching out into infrastructure, with a cloud computing unit, Amazon Web Services, which offers data network services and hardware. Gartner has estimated that as much as $247 billion in industry-wide spending on cloud services will be a double-digit percentage increase over last year.