Amazon Superseded by Tech Rival as Second Most Valuable Company in the World
It was a disappointing week for Amazon whose shares took a sharp downturn after dismal quarterly returns. The ecommerce giant has long held the title of the second-most valuable company in the world, but now it has been superseded by tech rival Microsoft, whose stocks soared after a standout third quarter.
Apple is still reigning as the most valuable company in the United States, but the No. 2 spot has just been snatched from Amazon. On Wednesday, the online retail giant unveiled its third quarter earnings report which led to a massive selloff in the market.
Even though the company reported an impressive 29 per cent increase in its revenues to $56.6 billion, but the company’s performance was well below market expectations, especially since Wall Street analysts had predicted a figure between $66.5 billion and $72.5 billion. It also lowered its earnings guidance for holiday sales in the fourth quarter, leading investors to believe that the company’s profitable days were now a thing of the past.
After Amazon revealed its earnings on Wednesday, its shares dropped 10 per cent in a massive landslide, reducing the company’s value to $803 billion. The online retailer has held the title of the second-most valuable American company in the world since April and has been quickly gaining grounds to becoming the next trillion-dollar company after Apple – but the recent downturn has thrown a spanner in the works.
Microsoft Overtakes Amazon
After a disappointing third-quarter performance, Amazon was overtaken by its tech rival Microsoft whose market capitalization soared to $821 billion, partially due to its well-performing gaming, Surface hardware and cloud divisions.
The 40-year-old company revealed impressive earnings for its third quarter on Wednesday, beating the market expectations and boosting its shares by 4 per cent in the process. Apple is currently dominating the tech industry with a market value of $926.9 billion.
Despite the slight downturn, Amazon has come a long way from its inception in 1994, when the humble startup had just opened business in an inauspicious location (Jeff Bezos’ garage). But while the company has seen phenomenal growth and success over the past years, it has also drawn criticism from regulators and lawmakers for poor working conditions in Amazon warehouses and inhumane treatments of minimum-wage employees.
Since the backlash, the company has raised the minimum wage for warehouse workers to $15 per hour. Amazon currently has almost 566,000 employees from all over the world and is trading at $1,971.31 per share.
According to financial experts an investment of $1,000 in Amazon at the time of its IPO would have grown to $20,000 today.
Amazon’s Success Story
In September, Amazon became the second American company in the world to reach a market valuation of $1 trillion, claiming the title of the second-most valuable publicly-traded entity after Apple. The company has been posting revenues in billions of dollars every quarter and its CEO, Jeff Bezos, is currently the wealthiest man on the planet.
Bezos, born in 1964 in New Mexico, is the most influential businessman and philanthropist in the world who had a deep interest in technology and science well before he founded Amazon. Even before starting his online business, Bezos had held key positions in several financial firms on Wall Street, until 1994 when he created Amazon in the garage of his Washington home.
Amazon was first founded as an online bookstore that sold and rented books nationwide, but it quickly expanded its business to other products and by 2010, it was already being dubbed as the titan of e-commerce. In 2017, he was named the wealthiest man on the planet, a title that had previously belonged to Bill Gates, the founder of Microsoft.
The billionaire CEO has a number of other promising ventures apart from Amazon including a spaceflight startup called Blue Origin which he acquired in 2013. He had also taken part in numerous philanthropic activities in the education and healthcare departments.
Bezos is currently worth around $112 billion, but if Amazon’s market cap tops $1 trillion, the CEO’s net worth could see an increase by a few more billions.
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