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Amazon will be the Largest Company in the World and 1st Trillion Dollar Company (alexdmoore.com)
30 points by alexdmoore on Jan 8, 2010 | hide | past | favorite | 22 comments



"They are currently valued at about $50BN, but are growing at about 20-25% annually and will continue to do so for the next few decades."

Hello, unfounded assertion...


More like "Hello link-bait title that got a post with virtually no real content to the top of Hacker News in under an hour"


"The housing market is growing 20-25% annually and will continue to do so for the next few decades."


He might simply be assuming a high inflation rate.

At 10% inflation, prices will multiply roughly 8x in 20 years, so a trillion dollars would only be about $125B in today's dollars. That's only about half of Wal-Mart's market cap.


In the case that level of general inflation actually happens and other large companies grow as much as well, one of the companies with higher valuation than Amazon today would be first instead of Amazon.


"...and the 1st Trillion Dollar Company"

I don't think he was


http://xkcd.com/605/


Amazon is leading two separate businesses that are growing very fast: online retail and cloud computing. It's sort of like being in the chain store business and the electricity business at an imaginary point in the 20th century when they both were about to take off.

Disclaimer:I am (stupidly) waiting for a local minima in AMZN's stock price to buy more.


The stupid part about waiting for a local minimum isn't the waiting, it's the thinking that you can even identify a local minimum.


Indeed. I once gave a presentation on the absolute futility of trying to time stock markets based on this excellent paper: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1032962

Given that and my long horizon, it is absolutely stupid, but that's (my) human mind for you.

"On average across all 15 markets, missing the best 10 days resulted in portfolios 50.8% less valuable than a passive investment; and avoiding the worst 10 days resulted in portfolios 150.4% more valuable than a passive investment. Given that 10 days represent less than 0.1% of the days considered in the average market, the odds against successful market timing are staggering. "

N.B.: To put a less stupid slant on it, I am sure ;) that the markets will shortly give in to periodic hysteria about the economy tanking, affecting retail, taking Amazon down with them


I hope you're selling puts while waiting.


For 2009 they're listed as position 130 on the F500, so only 129 positions to go.

Take a trend and make some wild-ass extrapolation.

I'm very much impressed with what amazon is doing in general but I don't see them ever holding that top spot.


To answer some points: In 2008, revenue grew 29% to $19.17 BN. You can go back over the past 5 or 10 years and nit pick, but the numbers are all solid and within the ranges mentioned. I used 15% in the article over 20 years to express my confidence in ecommerce overall and in Amazon's ability to capitalize. The thrust of my argument is changing consumer behavior, but also a strong long position on the value of computer science. Amazon will leverage CS and technology generally better than all competitors. I stand by my claims. The data backs it up. I am confident current trends will continue because the underlying phenomena is so powerful.


>bullish future where our society continues to have plenty of natural resources (oil, food and fresh water)

Thorium would cover a great deal of that; the critical resource we need is optimism.


If I had just kept growing at 20-25% annually I'd be over 260ft tall today.


Yea.. there will always be overly optimistic bulls and overly pessimistic bears. The future always falls somewhere in between. If you look back a few years, you'll see that Amazon had its fair share of doubters. Analysts and critics questioned their investments, and wondered whether or not they would ever be able to sustainably turn a profit. Amazon's definitely done well, and their long term philosophy works. See http://www.salaminder.com/2010/01/amazon-diversification-diw...

Nevertheless, the OP definitely falls into the "overly enthusiastic bulls" category. What large companies have grown at 15% a year for 20 years?


I grabbed the last four annual revenues for Amazon and Walmart from Google Finance. The average growth (in revenue) for Amazon over that period is 31%; for Walmart, 9%. World GDP growth is about 7% per year (over the last 30, through '08).

Assuming those continue then Amazon will sell $1T nominal in 16 years. Unfortunately for the author's claim, Walmart will do it in 12. And also unfortunately, with that rate of growth, Amazon's revenue will exceed world GDP in 41 years.


"... in 20 years maybe. They're currently worth 5% of that though". Paraphrasing the article of course.

At current trading, Wal-Mart is worth just over 204B, just for comparison.


He seems to assume that market cap moves in lockstep with revenue. A company's current market cap factors in expectations of future growth.


And by those standards, the market is as optimistic as OP; Amazon is trading at a P/E of 76.

Edit: I don't mean this necessarily as vindication for OP. A P/E of 76 seems very expensive.


I <3 Amazon, but I've started looking for alternatives (for buying, not for reviews) ever since they started charging us NYers tax. Sure, not their fault, blame NY state, but the point is, they are about 10% more expensive suddenly. Summary: If they do become super-big expect more taxes or more hindrances.


Beware of linear projections.




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