[ad_1]
Drew Angerer / Getty Images
- Amazon shares will rise 65 percent to $ 3,000 over the next two years if growth continues, an analyst at Piper Jaffray said.
- Valuation also relies on valuing Amazon's retail segment as an online trading company rather than a brick-and-mortar business.
- Amazon, the creation of its cloud services business would highlight the value of the remaining companies, says the analyst.
- Watch the Amazon Live Trade.
A Wall Street company said Amazon's shares could skyrocket from 65% to $ 3,000 by two years ago if the market stops valuing its retail segment as # 39 physical activity, instead of considering it as an e-commerce business.
Currently, the market is valuing Amazon's huge retail segment with a multiple of "brick and mortar" multiplied by 0.8, comparing Walmart, Costco and Home Depot, according to analyst Michael Olson. senior at Piper Jaffray.
If the market begins to apply a multiple of electronic commerce 2.1 times, the value of the business will more than double to reach 760 billion dollars. This would compare the retail segment of Amazon to Alibaba, eBay and Expedia, according to the rating.
Olson also notes that the creation of its cloud business, Amazon web services, could be an option to highlight the valuation gap. If AWS is derived, a transaction of up to more than $ 500 billion, the market could focus more on the valuation of retail, he said.
The recent initial public offerings of technology companies such as Lyft and Pinterest revealed that each of them had signed multi-year contracts with AWS, guaranteeing hundreds of millions in revbusiness.
"We are confident that AMZN shares will be able to reach this level without any major acquisitions or other significant changes in the business," said Olson. "A possible split of AWS, however, would undoubtedly help to highlight the relatively low valuation of other segments."
Surprisingly, Olson thinks that Amazon is undervalued even when a multiple of brick and mortar is applied. On this basis, the company is worth $ 2,031 per share, a premium of 10% over the market currently negotiated.
Amazon's shares have been volatile due to trade tensions, despite the outflow largely from the Chinese market, dominated by local players such as Alibaba.
In addition, the company's business does not seem to be affected by the drama surrounding the personal life of CEO Jeff Bezos. According to the terms of his divorce, Bezos will retain control of the vote of the couple's $ 144 billion stake. Jeff will retain ownership of 75% of the shares, worth more than $ 100 billion.
Amazon is up 22% since the beginning of the year.
Insider Markets
[ad_2]
Source link