By: David Clark, Founder, and CEO of Capital Strength Investments, LLC
It will take 13 figures, to achieve what no company has ever done before. The race to a trillion dollars is on, and six companies are essentially neck and neck in this last stretch, but who will take home the prize?
Many on Wall Street believe it will be Apple that will be first to claim the coveted title of the world’s largest company with at least a $1 trillion market cap. But banking giant Barclays thinks another company that’s not even halfway to a $1 trillion market cap is a strong contender for the crown. Amazon the retail and now cloud giant whose stock price has soared by an astounding 48% over the past year, and is now trading at a record high of more than $1,020 a share.
“It’s just a question of when, not if, in our view,” the team led by Barclays analyst Ross Sandler wrote in a note to clients this week, saying the company would be among the first to reach that valuation.
Amazon stock dropped more than 2% Friday morning, ending its impressive 4-day rally, but still giving the e-commerce company a market valuation of $488 billion.
Amazon seemed incapable of displeasing investors last year, with its profits growing nearly three-fold to $2.4 billion, on sales of about $136 billion, a 27% increase over the year prior.
If Amazon shares keep rising at the break neck pace they have in the last 12 months; it will get to the elusive $1 trillion market cap in just a little more than two years. It’s an incredibly fast pace to maintain: Amazon stock still needs to gain 140% from its current price to reach that 13-figure valuation. Markets are rarely so steady, investors so faithful, and competitors so unthreatening year after year.
Lucky for investors, Amazon has adopted a business model, not unlike the fictional “Umbrella Corporation” in which it seems that no industry is out of reach when it comes to this corporate titan. It is precisely this type of aggressive leadership and forward thinking that will help Amazon overcome the obstacles between them and $1 trillion.
Barclays thinks Amazon may become one of the first trillion-dollar publicly traded companies, but not for at least another decade. By 2027, the analysts predict that Amazon may finally reach a market cap of about $910 billion, still about 10% shy $1 trillion.
By then, Barclays estimates that Amazon’s revenue will nearly triple to $594 billion. But Amazon will have fierce competition in the race to a $1 trillion valuation, considering there are other contenders whose market caps are much closer to that goal. Here’s the short list of companies Amazon may have to beat:
1.Apple $779 billion market cap
2.Microsoft $563 billion market cap
3.FB $499 billion market cap
4.Google $657 billion market cap
5.Tesla $55 billion market cap