Walmart Shares Clobber Amazon This Year

By Douglas A. McIntyre Updated Jan 6, 1:31AM EST · Published Nov 2, 12:45PM EDT

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Walmart Shares Clobber Amazon This Year — © MikeMozartJeepersMedia / Wikimedia Commons

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Amazon.com Inc. (NASDAQ: AMZN) posted poor earnings and then lost out on a major cloud deal with the U.S. Department of Defense. In the meantime, Walmart Inc. (NYSE: WMT) has slowly but surely hoisted its way into a major position in retail e-commerce. Wall Street’s perception of the different paths has shown up in the share prices of the companies so far this year.

Amazon’s shares have actually underperformed the Nasdaq this year. The index is higher by 13.5%. Amazon’s shares are higher by 8.3%. In the meantime, Walmart’s stock has risen by 25.8%.

Amazon’s shareholders have become impatient because the company has returned to an old strategy. It will spend its way to more rapid growth and better market share then its competition. Its aggressive move into one-day delivery may give it an e-commerce advantage, but at what cost? While revenue grew from $56.6 billion in the third quarter of 2018 to $70.0 billion, per-share earnings dropped from $5.81 to $4.31. Investors also were concerned that its cloud business, Amazon Web Services, has slower growth than in past quarters, even though revenue rose from $6.8 billion to $9.0 billion. The Microsoft win with the Pentagon showed that, despite its leadership in the market, Amazon is hardly invulnerable.

Walmart’s growth is snail-like compared to Amazon’s. Its revenue in the most recent quarter rose 2.9% to $131.7 billion. This may be modest, but it once again cements its position as the world’s largest retailer, and one that can grow despite its size. In its home market, it has done particularly well. When management announced numbers, it said: “Walmart U.S. comp sales increased on a two-year stacked basis by 7.3%, which is the strongest growth in more than 10 years.”

Walmart also has started to flank Amazon in some of its most important businesses. Amazon’s move into groceries via its purchase of Whole Foods was meant to challenge Walmart. However, Walmart has grown its grocery pick-up business to 2,700 locations. Its in-home grocery business delivers fresh food to people’s homes. It has a next-day delivery operation to challenge Amazon’s.

Amazon may well still make a comeback. It has over 100 million Prime subscribers who pay $12.99 for services that include free shipping and its streaming media service. Its portable in-home assistance devices likely lead the market in share, which puts it into millions of homes. This presence has been leveraged to improve people’s ties to Amazon’s e-commerce business. Amazon Web Services has more competition than it did five years ago, but it is still the industry leader.

For years, Amazon was the hot company and Walmart the boring one. That has changed.
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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.