At the closing bell on Thursday, the market cap for Amazon.com Inc. (NASDAQ: AMZN) was $422.1 billion and the company was the fourth-largest U.S.-listed firm. The third-largest company by market cap was Microsoft Corp. (NASDAQ: MSFT) with a valuation of $501.9 billion.
In a note to investors last week, Needham analyst Kerry Rice upgraded Amazon’s shares from Hold to Buy and set a price target of $1,100 on the stock. Amazon’s 52-week high is $923.72, a peak reached on April 5.
Based on Friday’s closing price of $884.67, Amazon’s stock would need to appreciate by 24% in order to reach $1,100. With its current 478 million shares outstanding, Amazon’s market cap would reach nearly $526 billion at $1,100 per share.
Microsoft’s market cap would need to rise more than 5% to stay ahead of Amazon’s. Both companies posted double-digit share price increases in the past 12 months, but Amazon’s increase of nearly 49% was more than double the nearly 20% increase in Microsoft’s stock price.
Share price growth at both companies has slowed in 2017: Amazon’s stock is up about 18% for the year to date while Microsoft’s stock trades up about 4.5%.
Needham’s Rice is cited at CNBC: “We believe Amazon’s established dominance in U.S. is sustainable with Prime, mobile penetration and third-party growth.” Rice expects Amazon to add 16% to its retail market share over the next five years, which would mean that the online behemoth would hold about 50% of all U.S. retail market share.
From less than 20% of U.S. retail share in 2011 to 50% by 2021 — it’s no wonder that Wal-Mart Stores Inc. (NYSE: WMT) is pouring enormous investment into its own e-commerce business. Wal-Mart claims about a 5% share of the e-commerce marketplace, in third place behind eBay Inc. (NASDAQ: EBAY) with an estimated share of 7.7%.
If Amazon stock continues to rise at its year-to-date rate of 18% and Microsoft shares remain flat, Amazon’s market cap will catch up to Microsoft’s sooner rather than later.
Amazon’s shares closed at $884.67 on Friday, down about 1.3% for the day in a 52-week range of $599.20 to $923.72. The 12-month consensus price target on the stock is $969.74.
Sponsored: Find a Qualified Financial Advisor
Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Editors' Picks
