Amazon valuation has lost almost $200 billion in six weeks, falls behind cloud rival

Amazon was almost worth $1 trillion, now its worth less than Microsoft


Amazon was almost the second U.S. company worth $1 trillion last
month. Now, its worth less than a neighbor and major cloud rival.


AMZN, -7.82%

 has been No. 2 to Apple Inc.

AAPL, -1.59%

and briefly flirted with a $1 trillion market cap in early September,
but a steep descent after Thursday evening’s earnings on top of an
October tech-stock swoon chopped nearly $200 billion off its valuation.
Microsoft took a small hit on Friday, losing 1.2%, but finished the week
worth $821 billion, $20 billion more than the company on the other side
of Lake Washington.

On back-to-back days this week, Microsoft and Amazon promised investors at least 10% revenue growth for the fourth quarter. Microsoft was rewarded after its report, but Amazon’s forecast of 10%-to-20% growth was a much larger decline from the 30% growth it reported for the third quarter.See Also

Explosives Mailed to Prominent Democrats: How It Happened


Amazon may have been cautious with
its forecast. “Much of our, not only our revenue for the quarter, but
also for the year comes in that very tight window between middle of
November and the end of the year, so it’s always a very difficult period
for us to estimate,” Chief Financial Officer Brian Olsavsky said
Thursday afternoon in an earnings call.

Amazon had a legitimate
accounting excuse as well. Amazon Prime subscription fees were “tilted”
to the fourth quarter every year until 2018, Olsavsky said, when Amazon
stretched that total across the year. With 100 million customers now paying an increased $120 subscription price, that’s a big chunk of money that disappears out of this holiday season’s sales figures.

Microsoft Corp.Nov 17Jan 18Mar 18May 18Jul 18Sep 18Source: Dow Jones Market DataUS:MSFTUS:AMZN0%100%-25%25%50%75%

Apple became the first company to top the $1 trillion barrier in August, beating out Amazon, and has maintained the milestone through the week’s tech bloodbath, ending Friday at $1.05 trillion. Several analysts expect Microsoft to eventually top $1 trillion
as it continues to successfully battle Amazon in cloud-computing while
enjoying gains in cloud software and its legacy personal-computer
business, but more believe Amazon will get there.

share price would need to top $130 at current share levels to reach $1
trillion. A dozen analysts have price targets for Microsoft of $130 or
higher; the average price target of more than 30 analysts tracked by
FactSet as of Friday morning was $125.69.

Amazon would need to
top $2,045 a share to approach a $1 trillion valuation at current
levels. After the e-commerce giant’s earnings report, the average price
target on its stock from more than 40 analysts tracking the company was
$2,183.67. Only eight of those analysts have targets lower than $2,050 a


Leave a Reply

Your email address will not be published. Required fields are marked *