The Amazon Stock Story No One's Talking About

Amazon stock at $1,000 per share has been the story, but what interests this trader is the AMZN-WMT market cap dichotomy

Senior Market Strategist
May 31, 2017 at 10:02 AM
facebook twitter linkedin

Considering, Inc. (NASDAQ:AMZN) stock's watershed $1,000-per-share moment, also of interest is that AMZN’s market cap is approaching $500 billion ($476 billion as of May 26), while the market cap of Wal-Mart Stores Inc (NYSE:WMT) stood at $237 billion. I know $1,000 is a big deal, but a less-than-obvious consideration would be this 2:1 difference in market capitalizations.

A few obvious reasons for the dichotomy would be that Amazon has a much higher growth potential versus Wal-Mart. AMZN has less of a retail footprint and has beaten WMT online, and Amazon Web Services is a monster of a company in and of itself. Evidence is in the numbers, as AMZN’s P/E ratio of 187 is stodgy compared with WMT’s 18.

Another -- though less than obvious -- reason would be that Wal-Mart stock pays a steady and rising 2.61% dividend yield, while AMZN stock has yet to pay a dividend to shareholders. This dilution by returning cash to shareholders reduces the value of WMT and its market capitalization.

The chart below plots both companies' market cap (left-hand scale) with a ratio of AMZN/WMT market caps on the right-hand scale. You’ll note that the 2:1 comparison has never been reached before. At the beginning of 2015, Wal-Mart was worth twice as much as Amazon. What a change of events!

amazon walmart stocks market cap

And although Amazon stock is priced at twice the value of WMT, ponder the fact that just last year, Wal-Mart had revenue of $486 billion (up 1% YOY) -- the most of any publicly traded company and weirdly identical to AMZN’s current market cap -- whereby Amazon clocked sales of $136 billion (up 27% YOY). If anyone noticed, that is 3.6 times as much as AMZN.

I’m not suggesting shorting AMZN stock here and going long WMT; it would be an expensive trade, anyhow, with Amazon shares in the stratosphere. I'm simply highlighting a few facts that may go “unnoticed” by today’s headline-obsessed media, especially in relation to Amazon's peers.


Now is the time to join our thriving community of Event Traders who consistently profit from every earnings season. With this discounted subscription opportunity, you'll stay ahead of the curve and seize opportunities others miss. Do not let Q3 earnings season pass you by – subscribe now and supercharge your portfolio with expert insights that turn market reactions into profit-generating opportunities!! Don't waste another second... join us right now before the next trade targeting +200% is released!