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AMZN and BABA are Not Peers

by
January 14, 2015 8:37 am
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As Alibaba has burst onto the scene with its IPO, the closest competitor named (or most frequently named) seems to be Aamzon.com. Let’s look at five charts that show how these two firms aren’t even close to peers.

Rather than leave the best for last, let’s just start with it. On the x-axis we have plotted total revenue (TTM) and on the y-axis we have plotted net income (TTM).

chart 1

AMZN’s revenue of ~$85B is simply not in the same conversation as BABA’s $10B. Having said that, $BABA’s nearly $5B in net income is equally in a totally different conversation than AMZN’s net losses.

Let’s turn to a time series of each of those measures below, starting with revenue.

chart 2

Again, they just aren’t peers.

And now, let’s turn to net income in a time series.

chart 3

At one point in the not too distant past, AMZN delivered over $1B in net income over a trailing twelve month period. As of right now, the firm stands squarely at a loss. On the other hand, BABA peaked at over $5B in net income (TTM) until last quarter, but still has never been negative, and my best guess is, will never turn negative.

The thing is, these two firms have totally different modes of operation and strategies. Nowhere is this more clear when we turn to research and development as a time series.

chart 4

AMZN has spent over $8B in the trailing twelve months on Content and Technology (R&D ish). In that same time period, BABA has spent just over $1B. it’s interesting to note that AMZN has spent more on R&D than all of BABA’s net income.

Finally, just to end on a “really?” note, let’s turn to a time series of cash from operations for both firms.

chart 5

Oddly enough, after all of that, the two firms have generated nearly identical cash from operations in the trailing twelve months. Well, there you go – two totally different firms… sort of.


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