What is Amazon Worth? What Is Market Capitalization?

What is Amazon Worth? What Is Market Capitalization? 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.

What is Amazon Worth?

In the e-commerce industry, one of the most well-known names is Amazon. 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, constantly increasing market cap and revenue, positive investor sentiment, and visionary leaders like newly minted CEO Andy Jassy and founder Jeff Bezos, it’s easy to understand why this company is one of the most valuable in the world.

We’ll take a look at these three areas that contribute the most to Amazon’s value to figure out what it’s truly worth:

  • Economic moat and competitive advantages
  • Market cap, revenue and outlook
  • Leadership and executive team
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Amazon Worth

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.

True Valuation

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

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.

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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.

Amazon Worth

Prime

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.

Logistics

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.

Competitiveness

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.

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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.

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.

Daria Uhlig, Brenda Zhang and Joel Anderson contributed to the reporting for this article.

Amazon Worth

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