Amazon catches Alibaba in profit for the first time in 2022

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Silvia

· 16 Feb 2021

Amazon catches Alibaba in profit for the first time in 2022

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In the middle of the digital age, technology companies have become the big claim of many investors, and that is that when there is the opportunity to meet almost any type of material needs by simply clicking on a click, expectations are very high. The battle within electronic commerce is the order of the day, a sector in which business projection is increasing daily, which collects more users across the various platforms and is able to provide more services.
The two biggest powers in the industry, Amazon and Alibaba, are struggling on both sides of the Pacific to see who can make the biggest profits.

So far it is Alibaba who achieves the highest net profit compared to its rival, Amazon, despite the latter being worth more than double in the stock market. But the consensus of Factset analysts already foresees that this situation will be reversed next year and that the American giant will defeat the Chinese for the first time, although for the time being it will be with 3% more profit. The gap between the two will widen in favor of Amazon, as according to estimates it would earn 13% more than Alibaba by 2023.
Amazon is currently the leader in electronic commerce in the US and Europe. The company founded by Jeff Bezos, who announced at the beginning of this month that he will no longer be CEO of the company, has a market value of more than one and a half billion dollars, and after the presentation of the results for 2020 by 21.331 million dollars. dollar in net profit, 84% more than in 2019, surprised the market and made it clear that he was worth winning this race.

“We believe Amazon is well positioned as the market leader in e-commerce and in the public cloud, where secular changes are still early: US e-commerce accounts for 20% of custom retail sales, and we estimate 15% of cloud workloads today," JP notes Morgan notes in a report, noting that the company" is beginning to show more benefits, with its high growth in advertising revenue and AWS [Amazon's cloud services] also more profitable
We still consider Amazon's shares as an attractive value, “they say from Deutsche Bank. And at Citi they believe that “it still has a long history of growth opportunities in its highly profitable business segments (3P seller services, AWS & Announcements). “The consensus recommendation of the investment bank is to buy, just like Alibaba's.

In addition, the group's CFO, Maggie Zhang, highlighted his developing legs, such as Taobao Deals, Taobao Live, Taobao Grocery and Taobao Short Video, in the presentation. Van Barclays believe that it is necessary to “reinvest the profits of the most mature companies on the eCom market in these fast-growing seed companies to improve consumer experience and engagement, although the new investment phase would reduce the margin under pressure able to put. group'

At this point, it is important to note that although Amazon will take the throne in profit, the Asian company will play with profit margins much higher than those of Amazon. For this year, analysts expect it to reach $27.70 gross profit (EBITDA) for every 100 invoices. On the other hand, the EBITDA margin in Amazon would remain 14.88%.

Investors pay more for Amazon shares, even with an estimated profit for 2022, as the PER (time the stock retrieves the expected profit) is 48.8 times on Amazon and 18.2 times on Alibaba.