How Amazon's Ad Business Could Hit $22 Billion In 4 Years

Amazon.com, Inc. AMZN has earned a reputation for excellence in the fields of e-commerce and cloud services. Its advertising business still has plenty of room for improvement, and one analyst sees it as a $22-billion opportunity for the company.

The Analyst

Jefferies analyst Brent Thrill reiterated a Buy rating on Amazon and raised the price target from $1,750 to $1,850.

The Thesis

Amazon is in prime position to ramp its advertising game in the years ahead, Thrill said in a Tuesday note.

Amazon seems to have prioritized advertising growth, and the company could soon join established online leaders Facebook Inc FB and Alphabet Inc GOOG GOOGL as the top names in online advertising, the analyst said. 

Thrill estimates that Amazon’s advertising revenue will grow 43 percent annually over the next five years, expanding from $4 billion in revenue today to $22 billion in revenue by 2022, which would still only account for less than 5 percent of the company’s total revenue by that time.

Amazon could singlehandedly account for about 8 percent of total U.S. digital advertising revenue by 2019, Thrill said. 

“Amazon's billions of touch points with consumers and end-of-funnel sales conversion are an advertiser's dream for targeting and attribution,” the analyst said. 

With all of Amazon’s major business segments firing on all cylinders, Thrill said the company should have no problem reaching a $1-trillion market cap within the next several years.

Price Action

Amazon’s incredible market run has continued so far in 2018. The stock is up another 17.9 percent year-to-date. Shares were slipping 0.86 percent to $1,584.71 at the time of publication Tuesday. 

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Photo courtesy of Amazon.