3 ms·
Their profit margin is 7% if you exclude AWS. That is similar to walmart. Amazon is worth almost 50% more than walmart right now Except Walmart generates 2x FCF
by samfisher83 10y ago
Their profit margin is 7% if you exclude AWS. That is similar to walmart. Amazon is worth almost 50% more than walmart right now Except Walmart generates 2x FCF when compared to Amazon. Even if you double profits they are trading at 50xP/E. Walmart Revenue 4-5X of Amazon.
- adventured 10y agoThe market is obviously betting Amazon is going to get a lot larger yet, at the likely cost of Walmart losing sales (Walmart stopped growing meaningfully years ago). In those types of circumstances, the company that is getting consumed is going to get a sizable discount applied to their earnings, as Walmart is today. And the company with growth almost universally gets a seemingly irrational multiplication given to their business. Same story repeats over and over again (IBM vs MSFT -> MSFT vs GOOGL > GOOGL vs FB). That value gap between Amazon and Walmart - ~$130 billion - can be argued to be solely made up of the market's valuation now slapped on AWS, based on the expectations of the coming three to five years. I've seen arguments getting routinely made by leading analysts and financial press that AWS is already worth nearly as much as IBM today. Is that true? Who knows, but it's clearly extremely valuable, whether that's $60 billion in market cap equivalent or $130 billion.
- samfisher83 10y agoWmt is 500 billion dollar company. How do you expect them to grow? They start to asymptote with overall economy. Even if they grow 1% that's 5 billion dollars.
- jonknee 10y agoSure, but that's why WMT shares are priced at a discount. The same thing happened to Apple, if you're not growing you will watch your P/E dive.