Why Amazon Stock Could Be Worth $2000 Soon

In the world of online retailing, having volume is key. Amazon.com has been growing its online sales faster than any other online retailer in the United States. Since the beginning of the year, Amazon shares (AMZN) have increased by 56%, compared to a 19% gain for the S&P 500. This helped bring up the net worth of Amazon’s CEO, Jeff Bezos, to $100 billion. His net worth grew by 33 billion dollars in a single year. In 1994 he was working on Wall St and was faced with a dilemma. He could either continue building up a small fortune, or abandon his current career at the time to sell books instead. Bezos’ decision to go with his gut and start Amazon would revolutionize eCommerce. Since 2002, Bezos has donated away Amazon shares worth about $500 million at current prices, according to a Bloomberg analysis. The billionaire said in April that he sells $1 billion of Amazon stock every year to fund his space business Blue Origin LLC.

The stock has a great track record over the years. AMZN rose 11% in 2016. AMZN surged by 118% in 2015. Back in the fall of 2001 AMZN was trading at only $6 per share. It is very unlikely the stock will continue to return outstanding results for investors over the next 16 years as it has done in the past. However, due to its continuing growth here are some reasons why the stock will probably soon hit $2,000 per share, or a 72% rise from today’s price.

Amazon Web Services (AWS) is the company’s fastest-growing segment right now. It grew 42% in the third quarter to $4.58 billion. The company pioneered cloud infrastructure in 2006, letting web developers quickly sign up to build sites, apps and run workloads by renting compute and storage capacity from Amazon rather than buying their own machines.

Key top-line metrics look strong, including a 15% growth rate of active users in the last 5 years. The amount of total physical and digital sales (28% CAGR), and third-party unit sales (36% CAGR) continue to grow faster than global e-commerce trends, suggesting that Amazon is gaining share while solidifying its network effect.

Amazon is starting to expand its margin. It was 3.1% in 2016. But some analysts are optimistic that Amazon can approach 6% operating margins by 2021 based on Prime and Prime Fresh adoption and price hikes, segment margins for Amazon Web Services exceeding 30%, and enhancing international profitability.

Its EPS growth is projected to be very high. The analyst’s consensus estimate is for AMZN to make $8/share in 2018, $13.91 EPS in 2019, and $23.98 EPS by 2020. If the actual growth rate over the next few years does increase by 75% a year then we will probably see the stock price rise to $2,000 per share soon.