Why is Amazon worth more than Walmart

Amazon overtakes Walmart on the stock exchange

After Apple, IBM, Microsoft and the like, the shares of Amazon have now taken the roller coaster ride. They gained 17% on Thursday after the market closed. That makes Amazon worth more than Walmart

Amazon surprisingly reported a profit on Thursday after the New York stock market closed in the course of the announcement of the quarterly figures. This was not big: With sales of $ 23.2 billion (from $ 19.3 billion in the same period of the previous year), the American online retailer generated just an increase of $ 92 million. But investors immediately ignited a fireworks display and sent the shares up 17% in after-hours trading.

Great joy about Mini-Plus

The great joy about the mini-profit can be explained by the fact that Amazon has so far not spoiled the shareholders with profits. Most of the time, Amazon has reported very high losses in recent years. Investors have tolerated this so far because they follow Amazon's motto that the company must invest every penny in expanding its online market leadership and developing new business areas. In the last few quarters, the high losses have given way to wafer-thin losses and sometimes even wafer-thin profits. The price jump on Thursday evening is also due to the surprising sales increase of 81% to $ 1 billion in the cloud segment. This area with generally very high growth potential could one day become an independent company valued in the billions in the double digits. At least that's what many investors and analysts hope for.

Nothing for weak nerves

Technology stocks are generally not for investors with the faint of heart right now. In the last few days, even stock market heavyweights like Apple have had to accept relatively high fluctuations in their market value; Apple had lost $ 60 billion of its market value in minutes on Tuesday after the announcement of quarterly figures that were below expectations. The stocks of the stock market and technology heavyweights IBM and Microsoft had also fallen sharply, dragging parts of the technology sector down with them. And Google had gained a whopping $ 65 billion in market value last week after the quarterly figures were published.

These nervous market reactions can in part be explained by the industry environment, which is characterized by high hopes: Investors are betting that the trends in information technology such as cloud computing, portable devices, mobile Internet, online advertising, Internet trading or as a service will be available Software (“Software as as Service”) will produce new winners. How much information technology is currently stimulating the imagination of investors is also shown by the high ratings of the start-up companies from Silicon Valley. In addition, investors are pumping large amounts of money into the start-up companies.

But it is not yet clear which of the more established and listed companies will actually win the race in the respective fields and in which case the sometimes quite high ratings (compared to the expected profit) are at all justified. Will traditional IT providers such as IBM or Microsoft with more traditional business fields manage to adapt in good time? And can an online advertising giant like Google still earn enough money with advertising on small screens in the future? And does Google also have costs under control, or is today's investor money wasted in the search for tomorrow's innovations? There are of course no conclusive answers. And that is why the quarterly reports of the IT companies are eagerly scoured by investors for possible answers. If doubts arise that the high hopes could not be fulfilled, the price drops sharply - and vice versa. Sentiment towards technology stocks is currently either “exultant” or “saddened to death”.

An expensive profit dwarf

After the course party on Thursday evening on the stock exchange, Amazon is now valued higher than the world's largest retailer Walmart (market value of $ 234 billion) with a market value of around $ 265 billion. And that despite the fact that Walmart generated sales of $ 486 billion in the last fiscal year, more than five times as much as Amazon. In addition, Walmart's annual profit of $ 16 billion stands against Amazon's loss of $ 241 million. This year's share price development also speaks volumes about what investors expect: Walmart's shares have fallen 15% since the start of the year, while those of Amazon have risen by 54% - not counting the price rally on Thursday evening.