What’s behind Amazon’s $1trn market milestone?

5 Sep 2018165 Views

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An Amazon warehouse in Szczecin, Poland. Image: Mike Mareen/Shutterstock

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Amazon is the second company to reach a market value of $1trn, joining Apple.

Just last month, Apple’s market value reached $1trn, thanks largely to the seemingly evergreen popularity of its devices. Now, tech behemoth Amazon has joined the iPhone maker, becoming the second company to cross the line over to $1trn.

Major milestone for Amazon

The e-commerce giant’s share price rose briefly on Tuesday (4 September), taking it over the trillion-dollar line for the very first time. The company has seen unprecedented growth over the last few years, gaining a presence everywhere from online shopping to film and television, and even groceries.

What’s particularly notable here is that analysts are still encouraging investors to buy Amazon shares. According to CNBC, 96pc of analysts with ratings on Amazon say people should continue accumulating the shares. This advice sits in sharp contrast with Apple’s current buy rating, which sits at 62pc.

Unprecedented growth

Starting as an online bookshop in 1994, Amazon’s continued growth has accelerated in the last decade, thanks to the company’s presence in a variety of areas. Data from Statista shows that the company’s net sales revenue in 2004 was just $6.92bn, in contrast to 2017’s astonishing figure of $177.87bn.

The company is making major headway with an array of business prospects, from the rapid growth of Amazon Web Services to plans for grocery delivery. The former in particular is used to host websites such as Netflix and Airbnb.

At present, Amazon employs more than 500,000 staff. CEO Jeff Bezos is the world’s richest man, with a net worth of about $167bn, according to a Forbes estimate from this week.

Amazon has its critics

It is not all rosy for Amazon, though. US president Donald Trump has criticised the company and Bezos for dominating the online retail space in the US – 49 cents of every dollar spent online there goes to Amazon.

Other critics have taken aim at the allegedly stressful working environments in many of the company’s fulfilment centres around the world. Numerous strikes have taken place in protest at the apparently poor working conditions.

Amazon’s home city of Seattle has cooled towards it in recent years as rents spiked. The company also stopped Seattle imposing a tax on large companies that was intended to tackle economic issues in the city.

Despite the criticism, it looks as though the firm’s trajectory is firmly on the up.

An Amazon warehouse in Szczecin, Poland. Image: Mike Mareen/Shutterstock

Ellen Tannam is a writer covering all manner of business and tech subjects

editorial@siliconrepublic.com