Amazon also finds good competition in brick-and-mortar retailers like Wal-Mart Stores, Inc. (NYSE:WMT) and Target Corporation (NYSE:TGT). Both of these giant retailers are enhancing their e-commerce operations in order to cater to the mobile lifestyle of customers.
As per Q1 numbers, Wal-Mart Stores, Inc. (NYSE:WMT) increased its online sales by 30%, which was higher than anticipated. The company also laid down plans for expanding its e-commerce operations in key markets that include the U.S, the United Kingdom, Brazil and China. Strategic investments are expected in Japan, Mexico and Canada, as well.
Recently, Wal-Mart bought a couple of technology companies and merged them with its technology lab in order to strengthen its online presence. Target Corporation (NYSE:TGT)’s recent announcement that it found technology companies to help the company grow its e-commerce business shows a ton of effort being made in grabbing a reasonable market share in the e-retailing industry.
It is reportedly working on same-day delivery service quite similar to a service launched by Amazon sometime back. Target’s recently launched ‘Cartwheel’ website with Facebook Inc (NASDAQ:FB) saw more-than-expected participation from customers who claimed various discounts to be redeemed at its stores.
Target’s first technology and innovation office, which will focus exclusively on e-commerce expansion, is a major step in achieving robust online sales/customer conversions.
Even Google Inc (NASDAQ:GOOG) is featured on the list of Amazon’s competitors, especially with the launch of Google Inc (NASDAQ:GOOG) Compute Engine cloud service that offers direct competition to Amazon’s Web Services (AWS). Under AWS, a customer can rent the hardware to run virtual servers as well as the software to manage the hardware. In order to compel customers to switch from AWS, Google is keenly focusing on the pricing of this service. For instance, Google has offered a per-minute pricing model as compared to Amazon’s per-hour pricing.
The bottom line
Well, I have already introduced you to the perplexing valuation of Amazon’s stock. Its share price movements fail to exhibit a sort of predictable relationship with the financial results. Hence, it is difficult to predict the stock’s movement with reasonable accuracy as it does not follow a well-defined pattern.
Most analysts feel that the stock is overvalued when compared to peers, which is definitely the case, and as such it is viable to sell the stock to avoid a steep decline in price.
However, I disagree with going short on the stock as I believe that even though it’s overvalued, Amazon’s stock has the potential to stabilize based on a study of its history and an analysis of future events. In my opinion, therefore, it makes sense to have this stock in your portfolio.
The article This Company Has It All: From A to Z originally appeared on Fool.com and is written by Mihir Mehta.
Mihir is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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