Amazon recently reached a trillion dollar market capitalization. This market capitalization has been met with mixed feelings. Some analysts claiming that Amazon is part of the new wave in a tech bubble. This tech bubble is soon going to burst. We want to conduct a brief examination of Amazon and the future prospect of the company. Amazon’s online sales have been on the rise for the past couple of years. However, now it has to keep up with competition from other companies.
What is now known as the Amazon bubble has been gradually building for the past couple of years. For instance, Apple has more than a trillion dollar market capitalization and made more than 11 billion dollars’ worth of profit the past quarter. Compared to Amazon’s 2.5 billion. In one-quarter apple generates more profit than Amazon has in its entire 21-year existence. This is a huge margin as far as profits are concerned. Due to this high profitability, Apple should be far much bigger than Amazon.
Amazon bubble creation
Amazon is part of a tech bubble that is created by speculative investments. As tech companies continue to grow tremendously more investors are willing to invest in tech companies due to the quick returns that they hope to get from these investments. Bitcoin was an example of such a bubble. People invested a lot in bitcoin due to its continued growth. This is what we may call speculative investments.
Amazon bubble and amazon’s competition
Amazon now has to continue facing new competitors in the market. This is especially true about its two largest income generation areas, web business, and retail. Walmart the largest retail store is continuing the growth of its online sales. They are now growing at an amazing 40% per year. With this new fierce competition, Amazon bubble will burst. In the web services, Amazon is facing competition from tech companies such as Google and Microsoft.