Amazon becomes the 2nd US company to join the $1 trillion club

Amazon
CEO Jeff Bezos holds up the new Kindle Fire HD 7″ and Kindle Fire
HD 8.9″ (L) during Amazon’s Kindle Fire event in Santa Monica,
California September 6, 2012.
Gus
Ruelas/Reuters

It’s official: Amazon
is the second American company to achieve a valuation of more
than $1 trillion.

Shares of the e-commerce giant gained about 2% in trading
Tuesday  to hit an all-time high of $2,050.27. Multiplied by
the current number of shares outstanding — 487,741,189 — that
puts the company’s book value just over the
same symbolic milestone that Apple hit less than one month
ago.

One trillion is a difficult number to imagine, regardless of
what’s being counted. And even less so when it’s the value of a
24-year-old company with a plethora of business units in addition
to its core retail focus. For context, the entire US stock market
— the sum of all publicly traded American companies including
Amazon — hit $30 trillion back in January.

Even more telling is Amazon’s size when compared to the entire
national stock markets of other countries. It’s book value is now
greater than that of every stock listed in all but 13 countries,
including those of Taiwan, Spain, and Italy, according to the

CIA’s World Factbook.

For the fiscal year 2017, Amazon and its 560,000 employees around
the world reported total sales of $177.87 billion, netting it an
adjusted profit of $6.15 per share,
according to the company’s annual report. 

But of that massive revenue, retail is slowly beginning to take a
backseat to other, higher-margin services. Amazon Web Services,
for instance, a unit that provides hosting and cloud computing
for other businesses, brought in $20 billion of revenue in 2017.

Here’s the breakdown of how Morgan Stanley — one of the stock’s
most bullish sell-side shops —sees Amazon’s five main units in
terms of value:

Morgan Stanley Research

Note that Morgan Stanley’s theoretical breakdown assumes a stock
price of $2,500 — higher than Amazon’s current price, and thus a
market value of slightly higher at $1.32 trillion.

Such astronomical growth from a small, Seattle book seller to one
of the world’s biggest companies, has made its founder and chief
executive, Jeff Bezos, easily the richest person in the world.
The 54-year-old is now worth more than $166 billion,
according to
Bloomberg’s billionaires index on Tuesday. The riches
have largely come through his ownership of 16.3% of Amazon’s
outstanding stock. Bezos brought home an annual salary of $81,840
in 2017, according to regulatory filings.

“This year marks the 20th anniversary of our first shareholder
letter, and our core values and approach remain unchanged,” Bezos
said in his 2017 letter to shareholders in March of this year.

“We continue to aspire to be Earth’s most customer-centric
company, and we recognize this to be no small or easy challenge.
We know there is much we can do better, and we find tremendous
energy in the many challenges and opportunities that lie ahead.”

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