Amazon is one of the largest companies in the world, and as such, its financials deal with some pretty huge figures. One of the most interesting figures to look at for large companies is their current cash pile, superficially in relationship to the greater economy and their competitors. Today, we are going to look at those things and answer the question: How much cash does Amazon really have? The answer is probably a bit shocking. Let’s get started.
Amazon’s Current Cash Pile
There are lots of ways to look at how much money Amazon is sitting on. Today, we are going to be looking specifically at the cash that Amazon is holding. Amazon’s cash on hand, for this article’s purposes, is defined as its actual cash, plus “cash deposits at financial institutions that can immediately be withdrawn at any time, and investments maturing in one year or less that are highly liquid and therefore regarded as cash equivalents and reported with or near cash line items.” (Macro Trends)
Using those metrics, we can see that Amazon currently has a cash pile of $58,662 million, as reported on their quarterly filings to the SEC. In more reader-friendly terms, Amazon has $58.662 billion in cash on hand, with $34.947 billion of that being cash and cash equivalents (CCE), and the remaining $23.715 billion being marketable securities. Adding them together gives us Amazon’s current cash pile.
Like all publically traded companies, Amazon is required to release its financial information each quarter to the Securities and Exchange Commission (SEC) in a form known as a 10-Q. These forms have all of the updated quarterly information for the company, including balance sheets, income statements, and cash flow. The most recent quarterly filings from Amazon were in September 2022, so all of this data has been compiled using that information. Amazon is estimated to report Q4 earnings sometime in early February 2023.
A Historical Comparison of Amazon and its Cash Reserves
While $58.662 billion is a lot, it doesn’t exactly mean much without a comparison to the company’s past. For Amazon, $58.662 billion in cash represents a 25.73% decline year-over-year, meaning they have less cash stockpiled at this point in the year than they did at the same time last year.
For reference, this is the first year in a while that the year-over-year cash has declined for Amazon’s Q3. 2019, 2020, and 2021 all reported an increase in cash of 33.38%, 53.39%, and 13.81%, respectively, with 2022 having the first real downturn in a few years, at least.
For many investors, this could be viewed as a problem heading into 2023. Some are forecasting further economic downturn this year (2023), and the companies that can pile up lots of cash to make it through tougher times may be able to come out on the other side of the bear market (or recession) without long-term damage. Still, it’s important to remember that these are the Q3 reports and not the Q4 ones. It is very possible that the Q4 reports released in February show that Amazon used its strong holiday season to put aside some extra cash for the next little while. In times of growth, cash is great for self-investment and company development, but in times of downturn, cash is a great way to weather storms. While it isn’t certain what 2023 holds, many other companies are starting to top up their cash reserves.
“Companies in the S&P 500 have roughly the same amount of cash now that they ended 2020 with. And that’s the point. 2020 was a banner year for cash hoarding as companies hunkered down from the pandemic. Companies ended 2020 with roughly 20% more cash and investments than they had in 2019.”Investors
Amazon’s Cash, in Context
When talking about large companies, it can often be fun to look at how they compare to other large players in the game. Let’s look at a few other large companies and see how they compare to Amazon’s cash on hand (data compiled using Macro Trends):
|Company||Cash on Hand (Q3 2022)|
These companies are some of the largest cash hoarders in the world market right now. It’s important to note, however, that many of these companies can represent even larger numbers if we include total assets.
What Companies Could Amazon Buy Outright?
With nearly $60B in cash, Amazon could outright buy a LOT of other, smaller companies.
Uber, for example, has a market cap of $51.63 billion, meaning Amazon could totally incorporate them without any debt and still have a little left over. Some other companies that Amazon could outright buy with their cash include Monster Beverage ($53.48 B), Dollar General ($54.98 B), Airbnb ($55.73 B), Heineken ($57.43 B), and Keurig Dr Pepper ($50.60 B).
Why Would a Company Like Amazon Need to Save Cash?
There are several reasons why a company may stockpile cash. One reason is to have a financial cushion in case of unexpected expenses or downturns in the market. Having a large amount of cash on hand can help a company weather economic storms and continue to meet its financial obligations, such as paying employee salaries and bills.
Another reason why a company may stockpile cash is to take advantage of investment opportunities that may arise. If a company has a large amount of cash available, it can quickly take advantage of any investment opportunities that may present itself, such as purchasing new equipment, acquiring other companies, or expanding into new markets.
A company may also stockpile cash in order to pay dividends to shareholders. If a company has a large amount of cash and no immediate need for it, it may choose to distribute some of that cash to shareholders in the form of dividends. This can be a good way for the company to reward its shareholders and show its financial stability. Apple, for example, just did this with a huge stock buyback within the past year.
Finally, a company may stockpile cash in order to maintain a strong credit rating. A company with a large amount of cash on hand is generally seen as more financially stable and less risky to lend to. As a result, having a large amount of cash can help a company to maintain a strong credit rating, which can make it easier for the company to obtain loans or other forms of financing in the future.
- Who Actually Owns Amazon Stock
- How Much is Amazon Stock, and Why is it So Expensive?
- Google Stock Split: What It Actually Means For You
The image featured at the top of this post is ©K.unshu/Shutterstock.com.