As of the quarter that ended in September 2024, Amazon's (AMZN) book value per share was $24.66. This fundamental metric provides a snapshot of the company's net asset value on a per-share basis.
Understanding Amazon's Book Value Per Share
Book value per share (BVPS) is a key financial metric that indicates the amount of equity a common shareholder would receive if the company were liquidated based on the values recorded on its balance sheet. It is calculated by dividing a company's total common equity by the number of outstanding common shares. While it doesn't always reflect a company's true market value, it serves as a baseline and is often used by investors to evaluate a stock's valuation in relation to its assets.
Key Financial Metrics for Amazon (AMZN)
To put Amazon's book value per share into perspective, it's helpful to consider its relationship with the current stock price through the Price-to-Book (P/B) Ratio.
| Metric | Value | Context |
|---|---|---|
| Book Value Per Share | $24.66 | As of Sep. 2024 Quarter |
| Current Price | $220.52 | Current |
| P/B Ratio | 8.94 | Current |
The Price-to-Book (P/B) Ratio compares a company's market price per share to its book value per share. A P/B ratio of 8.94 for Amazon indicates that the market values Amazon at nearly nine times its book value. This often reflects investors' confidence in the company's future earnings potential, brand strength, and intangible assets that are not fully captured on the balance sheet, such as its e-commerce platform, cloud services (AWS), and logistics network.
What Book Value Per Share Means for Investors
For investors, understanding book value per share can offer several insights:
- Valuation Benchmark: It can serve as a conservative estimate of a company's intrinsic value, particularly for companies with significant tangible assets.
- Comparison Tool: Investors often compare a company's BVPS to that of its competitors or industry averages to assess relative valuation.
- Indicator of Growth: A consistently growing BVPS can signal that a company is effectively reinvesting its earnings to expand its asset base and equity.
- Risk Assessment: In some cases, a very low P/B ratio (meaning the stock trades close to or below its book value) might suggest that the market has a low expectation for the company's future growth, or it could indicate an undervalued opportunity. Conversely, a high P/B ratio like Amazon's signifies that investors are willing to pay a premium for its future prospects.
