Amazon is now officially the most valuable publicly traded U.S. company after its shares rose 3 percent yesterday. This saw it leapfrogging Microsoft to reach the top spot for the first time in its history.
At the close of Monday trading, Amazon’s share price stood at $1,629.51, meaning that the e-commerce giant’s market value was a cool $797 billion.
It is a remarkable rise for Amazon, which began life in 1994 as a niche online second-hand book retailer which was set up in a garage in suburban Seattle. It first floated on the stock exchange in 1997 when it was valued at just $54 million. Today, its founder, Jeff Bezos is the world’s richest man, with a personal wealth of $135 billion, according to Bloomberg’s billionaire index.
His long-term strategy of putting growth before profits and investing in things like warehouses, distribution networks, and data systems is now bearing fruit in a huge way.
Before yesterday’s trading, it was Microsoft who sat top of the pile after taking over from Apple last November. Their share price also rose yesterday, but a modest increase of just under 1 percent left their shares trading at $102.06, which was not enough to see them remain as the country’s most valuable company.
But while yesterday is the first time Amazon has officially been America’s most valuable company, their shares continue to trade well below their peak. At the end of trading on Monday, Amazon shares were still trading around 21 percent lower than the high they reached last September when the company was valued at more than $1 trillion.
That was at a time when Apple was worth even more. But while Amazon’s 21 percent drop seems significant, it pales in comparison to Apple’s enormous 37 percent decline since October, which is thought to have wiped more than $400 billion of its market value.
The overall slump in tech shares is due, in no small part, to the ongoing trade war between the United States and China, which has seen Chinese demand for American products drop sharply.
Apple last week warned that disappointing demand for its iPhones, especially from China, had caused revenue for the most recent quarter to fall significantly below the projections of its management and industry analysts.
Amazon is not nearly as exposed to the unpredictability of the market in China, where the ruling Communist Party can have a huge impact on consumer activity. But the trade war is believed to be slowing down the global economy as a whole and this is impacting all big tech companies, including Amazon.