Running Head: AMAZON.COM: THE SKY IS THE LIMIT 1
Amazon.com: The Sky is the Limit
Michel Herszenhaut
Southern Wesleyan University
Dr. Namhoon Lee
April 01, 2015
AMAZON.COM: THE SKY IS THE LIMIT 2
Amazon.com: The Sky is the Limit
Overview
If there is a brand that represents every aspect of the internet, for sure this brand would be
the case of Amazon.com (NASDAQ: AMZN). The company is a kind of a Coca-Cola’s of
internet services. In another words, its success has become the role model of e-commerce. The
company that began its operations by selling books, today offers a unique service. Amazon’s
online shopping experience display a countless variety of products for different tastes and
personalities. Although Amazon is a service that display’s third parties’ products for sale, it also
invested on the clouding computing industry, which allowed other companies to store data and
application on Amazon’s serves through Amazon web services (AWS). The service that started
with the intention to develop into the earth’s largest bookstore has become more than words can
describe.
Why Invest on Amazon.com Stock?
Amazon is certainly a very powerful online business, but for sure is not “very profitable.”
In fact, the story of the company contradicts what many consider to be the main capitalist rule –
the duty of a company is to maximize profits for its shareholders. Over the past two decades,
Amazon’s revenues increase exponentially while its profits not so much. In 2013, Amazon
recorded a $74.5 billion in revenue while it recorded net profit of $274 million when compared
to 2012 net loss of $39 million (Hardy, 2016). In 2014, the company reported a $89 billion
revenue with and net loss of $ 241 million (Amazon.com, 2015). The same source says that in
2015, the game changed and Amazon.com reached $107 in revenue and a net income of $596
million. While these numbers do not mean much by themselves, it shows that Amazon.com can
be intense and blustery, but lacks in results.
AMAZON.COM: THE SKY IS THE LIMIT 3
Amazon’s Business Model
The main reason for those numbers are the company’s constant application of capital on
improving its system and deliver infrastructure – Amazon’s keys for success. A better and faster
service means that more consumers will choose Amazon in any market or industry, which
generates more revenue to invest in revolutionary business model instead of giving this
increasing shareholders’ wealth. Since Amazon went public, analysis’s agreed that the company
has crushed the market until the point to become the S&P 500’s 7th biggest company in the world
