Amazon’s (Quote, Chart NASDAQ:AMZN) brief entry into the $1 trillion club has some investors wondering how much runway is left for the stock which has more than doubled over the past year and is now trading near the US$2,000 mark.
Not to worry, says entrepreneur and venture capitalist Bruce Croxon, Amazon is just getting started.
This week, e-commerce company Amazon joined tech competitor Apple (NASDAQ: AAPL) as only the second company in the United States to hit one trillion dollars in market capitalization. The journey has been a marvel to behold, as the company which began as an online book seller run out of founder and CEO Jeff Bezos’ garage was first listed on the NASDAQ exchange in May of 1997. Since then, the stock has grown by an astounding 134,000 per cent, while those who invested $1,000 at Amazon’s $18.00 IPO would by now have an extra $1.3 million in their pockets.
Apple has been no slouch, either, having shot up 58,000 per cent since its debut in 1980. Many see Amazon surpassing Apple in terms of market cap in short order, which is no surprise, says Croxon, who has nothing but praise for the company whose sights are clearly set on world domination.
“Amazon is one of my favourite companies of all time, said Croxon on Bloomberg’s the Disruptors. “What I find interesting about this story is that when you break down the numbers between Apple and Amazon, Apple is being valued at a trillion dollars really on the back of a great business but they drive just under 30 per cent through the bottom line. Amazon, roughly the same amount of sales, is two or three per cent to the bottom line. So, completely different companies.”
“Apple has done a very good job of sticking to their knitting. Basically, a hardware company that’s trying to edge into services. Amazon is the everything to everybody, and that costs money,” he says. “By reducing the number of verticals they’re in or stopping a little bit of innovation, they can drive as much bottom line as they want. So, I believe that they can turn two into thirty and I think that they can do it anytime.”
Amazon is the runaway world leader in terms of research and development, spending a reported $23 billion on R&D last year (although the company notoriously declines to separate its R&D from its payroll and related employee expenses, another way that Amazon stands apart from the pack in terms of philosophy and practice).
Croxon says Amazon’s omnipresence across the tech landscape and beyond is its singular achievement. “I’m blown away by this guy Bezos,” he says. “I mean, there’s not an area of technology that we come up against as venture capitalists in Canada trying to back homegrown companies where we don’t have to ask, ‘Well, what are Amazon’s plans in this area?’”
“I think that there won’t be a segment of our lives that they won’t touch. They’ve been very up front about that,” he says. “They’re out to change the world and they’ve been doing it since the day they were born. And beyond that, they say that we’re going to like the world of Amazon, and I’m inclined to believe them.”
Disclosure: Cantech Letter’s Nick Waddell owns shares of Amazon