JPMORGAN: Amazon could be worth $1 trillion some day

  • JPMorgan says that Amazon's market value could eventually grow to more than $1 trillion.
  • The firm says that Amazon is "investing in more major growth opportunities than any other company."
  • The stock would have to surge 66% from current levels to achieve a 13-digit valuation.


Amazon is already the fourth-highest valued company in the US market at $602 billion, but JPMorgan has its sights set much higher.

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Which is saying a lot, since Amazon's 56% surge in 2017 was already the best in the hyper-elite "FANG" group, which also consists of similarly red-hot Netflix, Facebook and Google.

"We believe Amazon has the potential to be a $1 trillion dollar company over time, as it remains early in the e-commerce and cloud secular shifts," JPMorgan analyst Doug Anmuth wrote in a client note. "And in our view, Amazon is investing in more major growth opportunities than any other company we cover."

7 shock-worthy facts about Amazon:

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7 shock-worthy facts about Amazon
7.5 percent of Seattle's working-age population are Amazon employees

Amazon has more than 300,000 employees worldwide, and 40,000 in Seattle alone.

As a portion of the city's working-age population — roughly 528,000 — that comes out to 7.5% of the city working at Amazon.

For perspective, if the same portion of New York City's adults worked for one company, that company would have about 488,000 locals on staff.

Amazon accounts for 43% of all online sales

Amazon used to be a way to buy books online; today, it's the default buying site for just about everything, especially for people who have Amazon Prime.

An analysis by Slice Intelligence released in February found that 43% of all US online retail sales were done through Amazon in 2016.

That's up from 33% in 2015 and 25% in 2012.

1 out of every 4 US adults has Amazon Prime.

Speaking of Amazon Prime, the company now counts approximately 63 million people among its subscriber base, or about 25% of the total US adult population.

That number may underestimate the true coverage, however, since it doesn't account for multiple adults in one household all sharing the same Prime account.

Amazon ships 1.6 million packages a day

Amazon fulfillment is a beast of its own.

A report from 2013 (the latest year for which data are available) found Amazon shipped 608 million packages that year, or 1.6 million packages a day.

As of 2015, Amazon estimated its fulfillment centers were within 20 miles of 31% of the US population, and within 20 miles of 50-65% of its core, same-day-accessible market.

That's enough cardboard to span all of West Virginia

A back-of-the-envelope calculation reveals all those packages (not including padded envelopes) yield roughly 26,400 square miles of cardboard.

The total land area of West Virginia, meanwhile, is just north of 24,000 square miles.

Given the speed of Amazon's shipments, the company could blanket the whole US in cardboard in about five months.

45,000 robots roam the floors of Amazon's warehouses

To help those shipments leave the warehouses on time, Amazon relies on a growing fleet of autonomous robots that fetch packages from their shelves and bring them to human employees.

The 45,000 robots live across 20 fulfillment centers in the US. In 2016, the company increased the fleet 50% from its prior head count of 30,000.

Amazon is more valuable than all major brick-and-mortar retailers combined

The sum total of those investments in infrastructure and supply chain management have made Amazon by far the most valuable retailer in the United States.

Amazon's $356 billion valuation is so big, it's larger than Wal-Mart, Target, Best Buy, Macy's, Kohl's, JCPenney, and Sears combined.

With the recent acquisition of Whole Foods, there are no signs the retailer has any plans of slowing down.

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That's lavish praise, and quite a lofty outlook — one that JPMorgan thinks Amazon can achieve through the right mix of positive catalysts, which it outlines as follows:

  1. Numerous major growth opportunities, which will drive revenue, along with better margin flow-through in 2018
  2. Margin expansion despite hefty internal investment, driven by the "ongoing third-party mix-shift" and outsized Amazon Web Services and advertising growth
  3. Amazon Prime subscription growth and expansion into new markets — JPMorgan has an estimate of 95 million global subscriptions
  4. Amazon Web Services will maintain its strong 75% market share, with only a modest revenue deceleration
  5. More international retail revenue, driven by India and recent market launches in Australia and Brazil
  6. "Outsized" growth from newer revenue streams, like advertising, grocery and Alexa/Echo products

Anmuth has a long-standing overweight rating on Amazon's stock, but just raised his price target on the company to $1,385 per share, up from $1,375. While he's not the most bullish analyst, Anmuth's estimate is still 5.3% above a consensus estimate that factors in forecasts from 42 firms.

While shareholders would surely rejoice at an eventual 13-figure valuation for Amazon — which would require a gain of roughly 66% from current levels — no one would benefit more than founder and CEO Jeff Bezos, who was recently crowned the richest person in world history. If the stock achieves the full potential seen by JPMorgan, Bezos would hold an even more unprecedented level of wealth.

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