Amazon stock lost 6.2%
Amazon stock (AMZN) dropped 6.2% on Wednesday to close at $1,755.25, thus pulling down its market cap to $856 billion. The company touched $1 trillion on September 4, becoming the second company after Apple to hit a market cap of a trillion dollars.
Amazon gaining on strong product portfolio
Despite the significant trading loss on Wednesday, Amazon is poised to grow driven by higher-margin businesses such as advertising, cloud computing, and subscription services.
Amazon has been focusing on digital advertising and has become the third-largest digital advertiser in the US after the top two Internet players Alphabet’s (GOOGL) Google and Facebook (FB). Amazon’s cloud business, Amazon Web Services (or AWS), has also grown at a higher rate over the last three quarters despite increased competition from Microsoft’s (MSFT) Azure and Google Cloud.
For the past few years, Amazon has also been expanding its subscription services like Amazon Prime’s music and video streaming service, Audible’s audiobook service, and the Kindle Unlimited ebook service. In the second quarter, Amazon generated revenues of $3.4 billion from its various subscription services.
Amazon stock might hit $1.5 trillion in 2020
Some analysts predict that the stock has room for upside. Scott Devitt, an analyst from Stifel, has therefore set a price target of $2,525 per share. An analyst at Jefferies forecasts that the stock could touch $3,000 per share by 2020. One analyst from Baron Capital also told CNBC that Amazon could double its value to $2 trillion in three to five years.