Retail

Amazon and Wal-Mart Shares Both Up 14% in 2016

Douglas A. McIntyre

Published: December 10, 2016 9:10 am

Last Updated: January 12, 2020 4:55 pm

They have been chasing one another toward the goal of being the top retailer in America, by one measure or another, for years. Based on stock price, the race is a tie this year. The share prices of Amazon.com Inc. (NASDAQ: AMZN) and Wal-Mart Stores Inc. (NYSE: WMT) are each up 14% in 2016.

Wal-Mart has allayed some of the fears that e-commerce will smother its growth. Same-store sales improvement runs a tepid percentage point or two higher. However, that is better than the erosion at several other retailers of size.

Wal-Mart also has increased its commitment to e-commerce via a buyout of online shopping company Jet.com for $3.3 billion. At the time, Bloomberg reported on the Jet.com acquisition:

“Wal-Mart has definitely put its stake in the ground saying, ‘We’re going to be winning in e-commerce,’” said Joseph Feldman, an analyst at Telsey Advisory Group. “Amazon should be concerned about what Wal-Mart is doing.”

And Amazon is the largest e-commerce destination. However, Wal-Mart is massive. 24/7 Wall St. reported:

Amazon.com Inc. (NASDAQ: AMZN), the online retail company, sits next at 184 million unique visitors. Wal-Mart Stores Inc. (NYSE: WMT) is well down the list in 22nd place, with 93 million unique visitors. It, and the revenue it gets online, show something of the wall that Wal-Mart has to climb.

Occasionally, Wall Street becomes dismayed with Amazon because it overspends to get market share. Anxiety about its customer acquisition costs has been a long-time theme and has hurt shares from time to time.

As an aside, Amazon’s market cap is $365 billion and Wal-Mart’s is $216 billion. Wal-Mart’s shares will need to outperform Amazon’s by a wide margin next year to show that investor confidence this year was warranted.