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An Amazon Prime truck in downtown Seattle near Amazon HQ. (GeekWire Photo / Kurt Schlosser)

Shares of Amazon hit record highs last week and some analysts think the growth won’t stop for the foreseeable future.

The Seattle tech giant has emerged as one of the few companies that could potentially come out of the COVID-19 crisis stronger than ever.

Brent Thill, an analyst with Jefferies, said he sees a path toward $4,000 for Amazon’s stock, which was trading at $2,328/share on Tuesday, already up about 40% from mid-March.

Jefferies on Tuesday increased its 12-month price target for the stock to $2,800. Thill also said Amazon’s valuation could reach $2 trillion by 2023; the company hit the $1 trillion milestone in September.

The global pandemic has put a spotlight on the Seattle tech giant as millions rely on the company for everything from grocery delivery to cloud computing. Amazon is struggling to keep up with demand spikes from customers confined to their homes under shutdown orders around the world.

Jefferies ran a recent survey of U.S. consumers and found that Amazon was the only e-commerce retailer seeing a step up in customer spend from the outbreak.

“This confirms our belief that Amazon will benefit from COVID-19,” Thill wrote in a research note.

The primary reason consumers are buying more from Amazon is to avoid physical stores, the survey showed. Shelter-in-place orders and uncertainty about the safety of brick-and-mortar locations are giving Amazon an advantage over competitors.

The coronavirus pandemic will likely force department store chains to shut down, The New York Times reported, leaving more market share for Amazon to grab.

Amazon has likely signed up millions of new Prime members over the past month who are using trial versions of the $119/year program. Prime members end up spending about double on Amazon compared to non-members, research has shown. “We think that many who are experiencing for the first time the value, ease, and convenience of the service will decide to keep it, thus boosting Amazon’s future growth,” Thill wrote.

Thill described the company’s Amazon Web Services and Amazon Advertising businesses as “underappreciated” and key to helping Amazon drive profits to support investment in lower margin initiatives. AWS itself could be worth nearly $1 trillion in three years, he wrote.

Others are also bullish on Amazon’s growth. A report from RBC Capital Markets earlier this month projected that Amazon’s online grocery business, which has increased due to COVID-19, could produce $70 billion in gross merchandise volume by 2023, up more than 3X from 2019.

Increased online grocery purchasing via Amazon is also worth watching given that the category represents less than 5% of Amazon’s total retail sales, Jefferies noted.

Amazon’s stock price over the past 12 months. (Google Chart)

Amazon reports first quarter earnings next week. While its revenue will surely increase year-over-year, investors will be watching the company’s expenses. In his letter to shareholders last week, Amazon CEO Jeff Bezos said the company is spending more than $500 million through the end of April on hiring an additional 175,000 employees to help meet demand caused by the pandemic.?“While we recognize this is expensive, we believe it’s the right thing to do under the circumstances,” he wrote in the letter.

The Jefferies report called out potential risks of regulatory scrutiny, but it does not expect material impact on the stock over the next two years. Criticism of Big Tech, which had increased in recent years, could subside due to reliance on the giants during the COVID-19 crisis. Former Google CEO Eric Schmidt said last week that Americans should be “a little bit grateful” for the companies.

Steven Davidoff Solomon, a professor at University of California-Berkeley, wrote in The New York Times that large tech companies can take advantage of a “failing firm exemption” for M&A deals due to the pandemic.

“If past crises are any guide, the big technology companies are about to sidestep antitrust laws and get even bigger,” he said.

Microsoft, Apple, Amazon, Alphabet, and Facebook now account for more than 20% of the market cap of the S&P 500 index, Reuters reported.

High demand is not the only challenge Amazon faces during this crisis. The company is?taking heat for a growing number of COVID-19 cases?inside its warehouses. Politicians and labor activists are criticizing Amazon and calling for broader safety measures. Amazon this month?fired two highly visible employee activists?who regularly criticize the company’s position on climate change and conditions inside its fulfillment centers.

Amazon?says it has implemented 150 new process changes?and is taking extreme steps to protect employees. It is also?attempting to build an internal lab to test employees for the virus, rather than waiting for government testing to scale up.

Bezos said that testing everyone regularly for COVID-19 — not just his own employees — will be key to helping the world bounce back from the novel coronavirus crisis.

“Regular testing on a global scale, across all industries, would both help keep people safe and help get the economy back up and running,” Bezos wrote in his annual letter to shareholders. “For this to work, we as a society would need vastly more testing capacity than is currently available. If every person could be tested regularly, it would make a huge difference in how we fight this virus. Those who test positive could be quarantined and cared for, and everyone who tests negative could re-enter the economy with confidence.”

Dallas Mavericks owner and Amazon shareholder Mark Cuban floated the idea of Amazon delivering COVID-19 tests to Prime members during an interview with CNBC on Monday. Cuban said Amazon’s stock will continue to go “up, up, up, up, up” as more consumers rely on the company.

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