It took shares of Amazon.com, Inc. (NASDAQ:AMZN) roughly two years to get from $400 per share to $600. It took about one year for the stock to decisively cross the $800 per share barrier. At this rate, Amazon could hit $1,000 by Labor Day.
As trading commenced on March 29 the stock was up 1.5% within two hours. That’s a gain of $13 per share. Since the start of the year, AMZN stock is up 15%.
My own retirement is starting to look gold plated. I have more than doubled my money since buying in at $330 per share, and I took out the cash I invested earlier in the year, because Amazon was looking like too big a piece of my pie.
Still, I’m no Jeff Bezos. The founder and CEO of Amazon is now worth over $71 billion, making him the third-richest person on the planet. Warren Buffett, who has been accumulating wealth for over a half-century at Berkshire Hathaway Inc. (NYSE:BRK.A), needs to watch his back — Bezos is just $4 billion behind.
Pounding the Table
Despite all this, analysts keep pounding the table for Amazon like it’s a hot start-up. Barclays says Amazon will eventually be worth over $1 trillion, nearly two-and-one-half times what it’s worth today. If Bezos stays along for the ride, his net worth will approach $200 billion.
Not bad for an old bookstore, eh?
Of course, Amazon is a lot more than a bookstore. It has big plans in furniture in appliances, showroom stores that let buyers kick the tires on merchandise and then get it delivered. If you’re old enough, think Service Merchandise on steroids.
Amazon got into the Middle East market over the last week, buying Souq.com of Dubai for an estimated $650 million. Dubai gives the company a hub from which to attack all of Asia and Africa, and the price was a snip. Anyone who took stock already has a fat gain on it.
Amazon even beat the taxman this week. A judge ruled that the transfer pricing it used to move profits from the U.S. to Luxembourg a decade ago was legal, saving the company $1.5 billion. The company says it has $2.8 billion in earnings stashed abroad, and the “Double Irish” technique it had been using to cut its tax bill will still work until 2020.
Any Clouds on the Horizon?
If Amazon is going to become a real store, it had best boost its image, which is why the company recently hired its first community relations director, a woman who previously worked alongside the Gates Foundation finding homes for homeless families.
Amazon next reports earnings on May 4, and the “whisper number” is for earnings of $1.04 per share on revenue of $35.83 billion. That’s barely $500 million in earnings, with revenue equaling that of Christmas 2015.
You can’t hope to stop Amazon, it seems, you can only hope to contain it. Growth at Amazon Web Services, its cloud computing unit, was disappointing last quarter, and rivals like Microsoft Corporation (NASDAQ:MSFT) are closing-in by selling enterprise software online and counting that in their cloud revenue numbers. Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL) is also focusing on the space, which is why one analyst has actually taken down his Amazon price targets, although he sees plenty of growth for everyone in the space.
India may not be easy to crack, with new pressure from Alibaba Group Holdings Ltd (NYSE:BABA). Costs for entertainment are bound to climb, thanks to Netflix, Inc. (NASDAQ:NFLX) and the HBO unit of Time Warner Inc (NYSE:TWX), which will soon get a big sugar daddy in the form of AT&T Inc. (NYSE:T).
But those problems look awfully far off right now. For now, it’s Laissez les bon temps rouler: let the good times roll! Amazon has 35 analysts following it and 25 have it on their “buy” lists, with none below a hold. If you see Bezos, tell him he’s invited to my retirement party in a few years and the drinks are on me.
Dana Blankenhorn is a financial and technology journalist. He is the author of the sci-fi novella Into the Cloud, available at the Amazon Kindle store. Write him at danablankenhorn@gmail.com or follow him on Twitter at @danablankenhorn. As of this writing he owned shares in AMZN, GOOGL, BABA and MSFT.
