Chamath Palihapitiya, Founder and CEO Social Capital LLP, gave a controversial and galvanizing talk at the Sohn Investment Conference at Alice Tully Hall in New York on May 4. Amazon.com Inc. (AMZN) is a $3 trillion opportunity by 2025, he claimed.
Palihapitiya got the biggest laugh at the conference so far: "There is a multi-trillion dollar opportunity in plain sight," he began dramatically. "That company...is Valeant. Too soon? That company is Amazon, everybody." He thinks Amazon will be worth $3 trillion in the next 10 years. From an investor's perspective, as he pointed out, that's 24% IRR (internal rate of return)/year.
By 2025, he said, Amazon will grow as follows: Retail will be $1T, AWS (Amazon web services) will be $1.5 T, bets and cash $0.5 T.
"What's crucial to growth is Amazon Prime. We think it's just beginning. Jeff [Bezos] says he's going to make it functionally irresponsible for any consumer around the world to not be a prime member." Last year, said Palihapitiya, people bought 6.5 billion "things" on Prime. By 2025 this would grow to 30 billion units sold. The current multiple of Walmart is at 18, he noted; if you apply that to Amazon, then by 2026, you get to the $1 T figure.
AWS is where it's at, said Palihapitiya. "All the stuff that hasn't been invented yet, like the future Snapchat, will also move to the cloud."
There are going to be "an unbelievable number of losers" as AWS grows in scale; no one will be able to compete. Last year alone, Amazon made more than 700 feature improvements in AWS.
"Jeff will invent things," and for everything he invents, there will be two monopolies in place already: Amazon retail and AWS. Amazon is "king-making."