Amazon Not So Special Anymore

Like EVERYONE's stock is $1,000 a share now or whetever.
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By Origafoundation (Own work) [CC BY-SA 3.0], via Wikimedia Commons

By Origafoundation (Own work) [CC BY-SA 3.0], via Wikimedia Commons

On Friday, Amazon capped the celebration of its 20th anniversary as a public company by winning its race with Google parent Alphabet to the symbolically important but otherwise fairly arbitrary level of $1,000 per share. This is a nice, round number, but really doesn’t tell Amazon’s story in the same way the 49,000% return it’s enjoyed in those two decades does. After all, if someone had gotten around to killing the stock split before Amazon did, its shares would be notionally worth $12,000 each.

For all of the hullaballo, you might assume that Amazon is the first $1,000 stock. It is not. Berkshire Hathaway shares, for instance, go for a quarter million each, and NVR and Seaboard shares trade for two and four times, respectively, $1,000. AMZN isn’t even the first S&P 500 stock to reach the level, nor the first online business, since Priceline shares fetch about $1,900 apiece. (That is not a typo.) Also, Alphabet shares traded over $1,000 before its split three years ago, although I guess there wasn’t technically a race back then, especially since Amazon was trading below $400 at the time.

But whatever, Amazon won the made-up race and three more cheers for Jeff Bezos, etc. We hope they enjoyed the weekend, because now they’ve got (more) company.

The Class A shares of Alphabet, the parent company of Google, touched $1,007.40 minutes after the opening bell, an all-time high….

The final push above $1,000 for Alphabet came after analysts at Pacific Crest Securities on Sunday recommended that investors sell shares of Apple Inc. to purchase Alphabet stock, arguing that the search giant offers “more substantial upside potential.”

What of the rest of the tech stocks that have been driving the market this year? The outlook there is somewhat less clear.

“Although they remain overweight, mutual funds faded the tech rally,” wrote the team of Goldman Sachs Group Inc. analysts, led by David Kostin, the firm’s chief U.S. equity strategist. “Managers reduced positioning in the sector to 133 bp (1.33%) overweight versus their respective benchmarks. However, hedge funds have continued to buy the rally. Hedge fund managers increased net positioning in Info Tech by 82 basis points, ending the quarter 352 basis points overweight relative to the Russell 3000 (25% vs. 21%).”

I guess it all comes down to whether you think the hedge fund guys are as smart as they do.

Alphabet Shares Hit $1,000 [WSJ]
Amazon Wins the Race to $1,000 [WSJ]
Will tech rally continue? Hedge funds say yes, but mutual funds say no [MarketWatch]
Hedge Fund Guys Think They’re Smart. Let’s See. [Bloomberg]

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