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It’s prime time at Amazon.com: Shares hit $1,000

May 30, 2017

16425376_l_620x310Amazon, the internet goliath that revolutionised the way much of the world buys books, toilet paper and TVs, hit a new milestone.

Its stock surpassed the US$1,000 mark for the first time.

That price put Amazon’s market value at about US$478 billion, double that of the world’s biggest traditional retailer, Wal-Mart, and more than 15 times the size of Target. A US$1,000 investment on Amazon’s first day of trading in 1997 would be worth more than US$500,000 today.

Not only has Amazon changed the retail landscape since it became a public company 20 years ago, it’s now part of a small cadre of high-flying stocks belonging to companies that have defied Wall Street and shunned stock splits.

Those splits make the stock more affordable and generate brokerage fees. But companies like Amazon have chosen to reward its long-term investors.

The last time Amazon has split its stock was nearly 18 years ago, according to financial research firm FactSet.

Another company with a similar philosophy is Alphabet, the parent company of Google.

Amazon just beat Alphabet to the US$1,000 level, with its Class A shares just US$2 short of US$1,000 Tuesday.

Only four other US-listed companies have shares trading above $1,000: online travel booking company Priceline Group, home builder NVR, pork producer and ocean transportation company Seaboard and the apostle of long-term investing, Warren Buffett, with his holding company Berkshire Hathaway Inc. But stock prices only tell a part of the story.

The value of a company is determined by its stock price and the number of shares on the market. Amazon.com is well over four times the size of Priceline, NVR and Seaboard combined. It’s 17 per cent bigger than Berkshire Hathaway, a multinational conglomerate with ownership stakes in some of America’s most well-known consumer brands like Coca-Cola, insurance companies and US infrastructure.

Since launching a website to sell mostly books in 1995, Amazon has transfigured retail, sent revenue numbers to stratospheric heights, and is among the biggest reasons longtime powerhouses like Macy’s, Borders bookstores and even RadioShack have suffered.

Those companies are closing locations and Amazon is filling the void, sometimes literally. Last week in a location once occupied by Borders, the bookstore chain that went out of business in 2011, Amazon opened its first bookstore in New York City.

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