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Why Amazon Could Generate More Revenue Than WalMart In 7 Years
With all the talk about Amazon’s ($AMZN) dominance in retail, it is still the very early innings. Using a regression analysis using Amazon’s current growth, Amazon’s total sales could eclipse those of WalMart ($WMT) in just seven years, putting the eCommerce giant’s total revenue at nearly $600 million.
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The war between Amazon and WalMart is likely just beginning, and the casualties may be all the other smaller retailers. But the real story will be Amazon; shares are trading higher by about 1.5 percent and are now trading over $1200, an all-time high. It seems that shares just continue to gain more momentum with a stock price that just continues to defy gravity.
Big Already
The company already has a commanding 17.5 percent weighting in the Consumer Discretionary ETF ($XLY). The next most significant stock is Home Depot ($HD), which stands just at 7.5 percent. So much of the discretionary rise in 2017 has mostly to do with Amazon, which has now risen by over 58 percent in 2017.
(Data Provided By Ycharts)
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Massive Growth
The growth in revenue has turned exponential and appears to be still ramping up. It would seem that most of Amazon’s success has come at the cost of others, like Target ($TGT), Best Buy ($BBY), Macy ($M), and Sears ($SHLD). The chart below shows how Amazon’s revenue has continued to climb, while the other major retailers have either had flat or declining revenue. It would suggest that whatever growth has been created in the industry from 2010, as gone directly to Amazon.
AMZN Revenue (TTM) data by YCharts
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WalMart Is Still Much Bigger
Then of course when adding in WalMart, you can begin to see just how much growth Amazon has.
AMZN Revenue (TTM) data by YCharts
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If one adds up the revenue totals on a trailing-twelve-month basis, of Amazon, Sears, Target, Dillards, Macy’s, JC Penney, Best Buy, and Bed, Bath and Beyond it total $346.56 billion, still $148 billion or 30 percent shy of WalMarts $495 billion in revenue. Through 2017 analyst consensus estimates see Amazon’s total revenue rising to $275.28 billion, an increase of almost 71 percent. Even at the point, Amazon’s revenue would only account for 47 percent of WalMart’s total revenue.
AMZN Revenue (TTM) data by YCharts
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But the rest of those companies, are showing no or declining revenue growth.
SHLD Revenue (TTM) data by YCharts
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Could Amazon Be Bigger Than WalMart?
Running a regression model of Amazon’s revenue and analyst forecasted revenue through 2019, we can predict revenue growth. Amazon could actually pass WalMart on total sales by the year 2023. Of course, Amazon would need to continue to grow at its current rate, which is undoubtedly no easy task at all. But certainly it puts things into perspective, that Amazon likely has a very long runway of growth ahead of it.
So if retailers are scared of Amazon now, they better start getting terrified, because at the pace Amazon is growing it may soon be the most massive retailer.
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Tags: #amazon #walmart #retail
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This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.