SAN FRANCISCO — Shares of Amazon topped $1,000 Tuesday, a milestone that reflects its meteoric rise. So, next stop $2,000?
Analysts on Wall Street are overwhelmingly bullish — only one brokerage has a hold and none have “sells”, according to Bloomberg terminal data, and some of the most optimistic see shares hitting $1,250 in the next 12 months. Few want to miss out on one of the Internet’s biggest stock runs. Amazon shares are up 38% from a year ago and 14 times more valuable than they were a decade ago.
Yet momentum doesn’t last forever, an investing reality Apple shareholders finally faced two years ago.
Effectively, Amazon is two companies, one a retail e-commerce company that’s building out a global marketplace and the other a cloud storage and services company that accounted for the biggest share of the company’s consolidated operating income in the first quarter of 2017, outflanking retail profits.
On the retail side, arch-rival Walmart is the main potential roadblock to Amazon’s continued growth. Determined to move into e-commerce and with the advantage of a massive brick and mortar store base, Walmart is increasingly dynamic, Yruma said.
“You’re going to see more of the middle-income consumer moving to e-commerce — and they don’t have any loyalty to Amazon,” said Yruma.
With Walmart’s enormous logistics and distribution network, and its acquisition of the e-commerce company Jet.com last year, “they could very well begin to take away some of Amazon’s business,” said Scott Rothbort, a professor at Stillman School of Business at Seton Hall University.
A driver of Amazon’s success has been its strong focus on both the consumer and investment in new technologies that keep it well ahead of the pack. However Olson thinks that there’s substantial confidence that Amazon will continue to be prudent.
“Bezos has proven he’s focused on the long term, on shareholder return and the consumer. He understands both sides of the equation,” he said.“That’s the primary risk right now, that they overinvest, at least in the short term, and that puts pressure on profits,” said Olson.