Economy
AMAZON, NASDAQ: AMZN, has maintained the crown as the undisputed ecommerce leader, a factor that has influenced more investors to invest in the company. Despite rivals benefitting from factors like the pandemic, Amazon holds a significantly high market cap despite the ongoing volatility of the stock market.
According to data acquired and calculated by Finbold, Amazon’s market capitalisation for Q2 2022 ranked first among the top 10 retail companies at $1.08 trillion. Walmart (NYSE: WMT), Alibaba (NYSE: BABA), and Home Depot (NYSE: HD) ranked second, third and fourth at $333.33 billion, $304.1 billion,and 281.9 billion, respectively. Interestingly, Amazon still ranks higher than the $919.3 billion cumulative market capitalisation of the three companies.
Elsewhere, Amazon has maintained a high capitalisation despite the metric dropping by 34.9% between Q1 and Q2 2022. Among the top 10 retailers by market cap, only Alibaba, JD.com, and Inditex recorded positive gains between the year’s first two quarters at 2.7%, 8.7%, and 9.2%, respectively.
Impact of Amazon business model
The report explained some critical drivers behind Amazon’s ability to sustain a staggering market capitalisation dwarfing competitors. According to the research report:
“Amazon’s unique position among investors can be tied to the company’s innovative and customer-centered approach to managing its business, guided by the overarching mission of becoming the planet’s most customer-centric company. The factor has translated to significant profits, a crucial metric used by investors.”
Notably, Amazon’s business model has driven the company to high profitability while retaining a high cash flow. In this line, the research report notes that:
“Beyond profits and sales, a significant share of investors are interested in cash-flow generation, a factor Amazon appears to have mastered. Like leading tech stocks, Amazon has an impressive cash flow, with the firm opting to reinvest the money to expand into new areas.”
At the moment, Amazon appears poised to sustain its competitive advantage over other retail rivals. However, the company is still facing a threat as the closest competitors like Walmart continue to innovate, and the macroeconomic headwinds might impact the market cap.
A.I
Tags: Alibaba Amazon’ Walmart
