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Amazon seeks to be the 2nd company ever to achieve a market cap in excess of $1 Trillion. One analyst thinks that the travel industry could help it not only break through $1T, but blow past it. Interestingly enough, many analysts will point to Amazon’s ability to disrupt industries as justification for an 200+ P/E multiple, not the core retail business. As a matter of fact, Amazon Web Services generated $6B in revenue this past quarter and provided 25% of Amazon’s quarterly profit – a business most consumers have no idea it’s even involved in. So why would Amazon be interested in travel?
There are 10 Trillion dollar industries in the world today.
- B2B E Commerce
- Consumer Internet of Things
- Professional Services
- Gas Stations
Amazon participates in 8 of those 10.
The two it doesn’t? Gas Stations and Travel. Tom Forte of D.A. Davidson thinks that Amazon could emulate Costco in airline, hotel, and cruise packages. In fact, Amazon through its retail business, already provides nearly everything Travel related. So not only could they sell you a discount airline ticket and hotel package, but they could bundle it with suitcases, portable chargers, and other travel accessories. Forte says of Amazon, ” the company has a history of solving complex logistical problems. Financially, it seeks opportunities that can generate significant free cash flow.”
Personally, I’d love to see Amazon disrupt.
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