Amazon is actually the weakest of the big U.S. retailers, Moody’s says
Amazon.com Inc., far from dominating the retail sector, is actually the weakest of the big U.S. players based on operating results, Moody’s Investors Service said Wednesday.
The e-commerce giant is the subject of a number of myths regarding its size and clout that mask the reality of its position compared with rivals like Wal-Mart Stores Inc. WMT, -0.08% and Costco Wholesale Corp. COST, -0.03% , according to Charlie O’Shea, Moody’s vice president and lead retail analyst.
The perception that Amazon is poised to take over the grocery business via its acquisition of Whole Foods, which closed this week, is another myth, said O’Shea.
Estimates for the Amazon Prime membership base are also wildly inflated, O’Shea said, with some pundits betting the figure is as high as 85 million. Amazon itself has never provided a number, other than to say it is in the tens of millions.
Amazon like many other tech companies seems to have a different set of standards when It comes to other wall street stocks. Investors tend to focus just on the revenue growth of these tech companies even when the rest of the balance sheet sucks. Amazon currently is at a P/E ratio of 247 vs Walmart's 19. That means Amazon stock is valued at 247 times it's earning which is screaming the bubble is about to burst but investors don't seem to care these days.
I think that mainly has to do with how the stock market is being rigged by the central banks. You can throw fundamentals of a company's balance sheet out the window if you know the Federal Reverse is behind the scene buying up stocks and bonds to keep the markets propped up.
I like how this guy from Moody's put things into perspective for people because we tend to just hear all the hype about these tech companies and frankly I wouldn't be surprised if a lot of these positive stories we see in the media about them are just a bunch of ghost writers being paid by these companies.
As you can see from the chart below Whole Foods isn't even close to being a contender to Walmart but the media will tell you otherwise.
Amazon sells a bunch of shit but you can see from the chart that they made dick for profits. Most of their money has come from their overly valued stock.
Source: http://www.marketwatch.com/story/amazon-is-actually-the-weakest-of-the-big-us-retailers-2017-08-30
Thank You ! Very intetesting topic. Never heard this about amazon !
Um, okay, but the chart of Walmart versus Amazon for the past 20 years is ridiculous. Amazon didn't exist 20 years ago. Walmart did.
you might want to double check that.
Yes, I know you are correct that they technically existed since 1994, but most households did not have the Internet back then. It is was in the days of dial-up and Sprynet Mosaic browser. The wen was primitive. Many people didn't even know how to use a computer or have them in their homes at that point. I don't think that Internet selling came into prevalence until the early 2000's. Even then, Amazon was most still selling books and E-bay online auctions were probably used more than amazon because there was a wider range of stuff.
I guess my point is that I think a 20 year comparison is asymmetric and something like a 10 year comparison would be more intellectually honest. Plus you're comparing a company that was literally in its infancy and growing/developing along with the internet to Walmart which was established in 1962.
Now if you wanted to use a chart comparing Walmart for 20 years starting in 1962-1982 versus Amazon from 1994-2014, then that would be a more honest comparison.
I understand what you're saying but you're kind of missing the point of the article. There is much hype about this merger with whole foods is going to kill Walmart and this guy from Moodys is saying don't hold your breath. Whole foods isn't even a close competitor to Walmart and he is pointing out some important facts that other people haven't looked at or just plainly ignored to hype the story even more.
One of the things that Walmart did to kill its own competitors like Kmart was to add food to its stores. Before Walmart started selling groceries, with the creation of the Super Center Walmarts, it was nothing special. Selling food accomplished the goal of getting people into their stores and made it a one stop shopping destination, especially since most people shop for food at least once a week. This vastly increased their sales.
With the purchase of Whole Foods, Amazon is following Walmarts business model. Whether they will succeed or not, is too soon to sell. But I would not count Amazon out just yet. And I don't particularly like Amazon... they are only slightly behind Facebook and Google in the race to be the most evil company in existence.