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Money News

What Amazon’s Trillion Dollar Valuation Means

September 06, 2018

  • Amazon’s market valuation hit $1 trillion on Tuesday
  • It is the second company in history to hit that milestone
  • Market cap is a key measure of a company’s worth to investors
2 min read

E-commerce giant Amazon broke a record early this week, becoming the second company in history to reach a market cap of $1 trillion.

What happened?

On Tuesday morning, Amazon’s stock surpassed $2,050 a share. That sent the company’s market cap, or valuation, above $1 trillion.

In August, iPhone manufacturer Apple made history as the first company whose market cap surpassed $1 trillion.

At least two other prominent technology companies—Google and Microsoft—are closing in on similar milestones, with valuations close to $900 billion.

Why is this important:

How do you calculate market cap?

It’s simple: you multiply the number of a company’s outstanding shares by its current share price. Learn more about market cap here.

Amazon has 474,740,000 shares outstanding. On Tuesday, it’s share price closed at $2,050.50.

487,740,000 X $2050.50=$1,000,110,870,000.

To put it another way, Amazon has nearly half a billion shares that it sells to the public. When you multiply half a billion by a share price of more than $2,000, you get a valuation of approximately $1 trillion.

How does Amazon’s valuation compare?

One trillion dollars is a staggering amount of money. To get some perspective, here are the respective market caps of some other big U.S. companies.

General Motors
*Source: Yahoo Finance, as of mid-day September 6, 2018

Other things to keep in mind

On Wednesday, Amazon’s stock price fell a bit, pushing its market cap just below the $1 trillion threshold, where it remains.

Facts about Amazon: Jeff Bezos founded Amazon in his garage in 1994, as an online bookseller. It went public in 1997 with a valuation of $500 million. Amazon has made Bezos a very rich man. His fortune is currently worth about $166 billion, making him the richest person in the world.

By Jeremy Quittner
Jeremy Quittner is the senior writer for Stash.

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