In the previous week, you conducted a ratio analysis on Alibaba (BABA) and Amazon (AMZN). Which...

In the previous week, you conducted a ratio analysis on Alibaba (BABA) and Amazon (AMZN). Which company has a higher valuation from a market value perspective? How about from a book value perspective? Which company would you invest in and why?

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Expert Solution

	Alibaba	Amazon
Market value ($ billion)	462	16.327
Book Value ($ billion)	73.25	43.549

Please see the table above. All the financial data had been taken from https://www.nasdaq.com/symbol/amzn/financials?query=balance-sheet

Alibaba has a higher valuation from the market value perspective as well as the book value perspective. Alibaba scores over Amazon on both the counts.

As an investor, I will prefer Alibaba to Amazon:

Chinese market is growing faster than US markets. Alibaba has better growth prospects than Amazon.
Internet and smart phone penetration in increasing in China. These have kind of stabilized in USA. This will be engine for the growth of Alibaba.
Business diversification: Alibaba's operations extend far beyond online commerce:
1. Fast-growing businesses such as mobile payments, digital advertising, and cloud computing.
2. A powerful presence in China's brick-and-mortar retail industry with its "New Retail" strategy.

jeff jeffy answered 1 week ago

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