Amazon’s path to becoming a $2t company
Amazon made its second-biggest acquisition yesterday — yet its stock barely budged…
What’s the big deal? Amazon’s stock stayed flat since last July despite tremendous growth this year and big news reports this week:
- Agreed to an $8.45b acquisition of MGM, the movie studio behind James Bond.
- Considering a push into physical pharmacies (via Insider sources).
- Sued by Washington’s DC Attorney General — alleging Amazon illegally raises prices.
Will anything come from the lawsuit? Unlikely. According to Bill Kovacic, most lawsuits in this area end in settlements. As for its mega acquisition, Amazon will have a greater range of content to power its long-term streaming goals.
As the 4th largest company in the world by market cap ($1.6t), it’ll take a lot more than an $8b acquisition to move the needle.
The Joe’s Take: Of the 10 largest US companies, Amazon grew the most in 2020 (37%) — a tremendous feat given its size. On top of which, they’ve been increasing earnings by an average of 155% a year for the past 5 years.
- At this growth rate, it’s only a matter of time before Amazon becomes a $2t company (25% higher).
- Which could take some time if Amazon’s sales slow down to its post-COVID growth rate of 20%…
Not so lucky are pharmaceutical stocks like CVS (NYSE:CVS) and Walgreens (NASDAQ:WBA) falling on Amazon’s pharmacy goals — the effect every time Amazon eyes a new market.