{"id":3126,"date":"2017-03-27T08:30:29","date_gmt":"2017-03-27T15:30:29","guid":{"rendered":"http:\/\/blogs.pugetsound.edu\/econ\/?p=3126"},"modified":"2017-03-26T18:55:56","modified_gmt":"2017-03-27T01:55:56","slug":"can-amazon-meet-investors-massive-expectations","status":"publish","type":"post","link":"https:\/\/blogs.pugetsound.edu\/econ\/2017\/03\/27\/can-amazon-meet-investors-massive-expectations\/","title":{"rendered":"Can Amazon Meet Investors’ Massive Expectations?"},"content":{"rendered":"

There is no doubt that Amazon is a massive company, with sales accounting for more than half of every new dollar spent online<\/span><\/a> in America. According to The Economist, many shareholders believe that this is just the beginning for Amazon\u2019s dominance, as the firm\u2019s share price has increased by 173% since early 2015, and Amazon holds a market capitalization of approximately $400 billion, making it the fifth most valuable firm in the world. The Economist also notes that despite these incredible numbers, 92% of Amazon\u2019s value comes from profits that are expected to be made after 2020, indicating that investors are anticipating a tremendous increase in revenue in a very short time.<\/span><\/p>\n

This means that Amazon will need to perform some remarkable feats in the coming years, including growing \u201cfaster than almost any big company in modern history\u201d in order to warrant its enormous valuation and meet investors\u2019 hopes. And if Amazon does succeed in this, The Economist notes that as the firm grows, so too will concerns about its power: \u201cIf it makes as much money as investors hope, a rough calculation suggests its earnings could be worth the equivalent of 25% of the combined profits of listed Western retail and media firms.\u201d The Economist claims that this level of growth is bound to attract the attention of governmental regulations, an issue Amazon has not struggled significantly with so far. Should this happen, Amazon may need to contend with preexisting antitrust regulations, and its rather unique business model may even inspire governmental agencies to explore new types of regulation, particularly if Amazon chooses to present itself as a utility for commerce.<\/span><\/p>\n

Another article published by The Economist on the same day as the one cited above provides a slightly different take<\/span><\/a> on Amazon\u2019s growth, examining the ways in which other firms have reacted to the threats that Amazon poses to their business. The author argues that the titanic status of Amazon has forced many sellers to adapt or die, claiming that \u201cIn America big, bland bookstores are struggling, but the number of independent booksellers has climbed. The threat from Amazon has forced Walmart to improve its stores, with easier checkout and more helpful staff; it has seen a bump in sales\u201d.<\/span><\/p>\n

This article also echoes similar warnings about Amazon\u2019s growth potentially sparking tighter regulation, and presents a new possible threat to Amazon: President Trump. As The Economist notes, \u201cDonald Trump does not care for the Washington Post, a newspaper Mr. Bezos owns. In 2016 Mr. Trump said Mr. Bezos was using the Post to attack him because Amazon has \u2018a huge antitrust problem\u2019. If Mr. Trump believes that\u2014or even if he doesn\u2019t\u2014his administration might favour action\u201d.<\/span><\/p>\n

On the whole, Amazon\u2019s future may be uncertain, but The Economist certainly seems to believe that the firm has the sticking power to potentially meet the astronomical expectations investors have placed on it. Of course, only time will tell if this optimism is warranted, but it will be fascinating to watch Amazon\u2019s development as it steams toward an expectations-heavy 2020.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

There is no doubt that Amazon is a massive company, with sales accounting for more than half of every new dollar spent online in America. According to The Economist, many shareholders believe that this is just the beginning for Amazon\u2019s dominance, as the firm\u2019s share price has increased by 173% since early 2015, and Amazon holds a market capitalization of approximately $400 billion, making it the fifth most valuable firm in the world. The Economist also notes that despite these incredible numbers, 92% of Amazon\u2019s value comes from profits that are expected to be made after 2020, indicating that investors Continue reading Can Amazon Meet Investors’ Massive Expectations?<\/span>→<\/span><\/a><\/p>\n","protected":false},"author":531,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[],"class_list":["post-3126","post","type-post","status-publish","format-standard","hentry","category-economics"],"_links":{"self":[{"href":"https:\/\/blogs.pugetsound.edu\/econ\/wp-json\/wp\/v2\/posts\/3126","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.pugetsound.edu\/econ\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.pugetsound.edu\/econ\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.pugetsound.edu\/econ\/wp-json\/wp\/v2\/users\/531"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.pugetsound.edu\/econ\/wp-json\/wp\/v2\/comments?post=3126"}],"version-history":[{"count":1,"href":"https:\/\/blogs.pugetsound.edu\/econ\/wp-json\/wp\/v2\/posts\/3126\/revisions"}],"predecessor-version":[{"id":3127,"href":"https:\/\/blogs.pugetsound.edu\/econ\/wp-json\/wp\/v2\/posts\/3126\/revisions\/3127"}],"wp:attachment":[{"href":"https:\/\/blogs.pugetsound.edu\/econ\/wp-json\/wp\/v2\/media?parent=3126"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.pugetsound.edu\/econ\/wp-json\/wp\/v2\/categories?post=3126"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.pugetsound.edu\/econ\/wp-json\/wp\/v2\/tags?post=3126"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}