Amazon VS Alibaba: Which is the better buy?

In the E-commerce industry, both this 2 companies, $Amazon.com(AMZN)$ & $Alibaba(BABA)$$Alibaba(09988)$ are the strongest among all. With that being said, which company would be the best investment of the next decade?

Lets look at the key takeaways:

1. Both this company operate internationally. However, 92% of Alibaba's revenue comes from China. While for Amazon, only 64% comes from United States, while the rest comes from other countries. This shows that Amazon's revenue is more diversified and not just contributed from one country.
2. Amazon's revenue is extremely high compared to Alibaba. For 12 months ended Q1 FY2020, Amazon made 296B while BABA made 72B only in revenue. However, their operating profit is almost similar, Alibaba made 12B while Amazon made 14B.
3. In terms of growth potential, Alibaba has actively invested in minority stakes in many companies outside of China and US. Alibaba has 2x more investments compared to Amazon.
4. While Amazon is is famous in America and its continent, Alibaba is extremely well to do in Asian countries as it has taken up almost all Asian Countries Market Share.
5. BABA has been growing at 44% CAGR while Amazon has only been growing at 27% CAGR.

After looking at all these facts, lets look at the valuation. Numbers will never lie.

Based on current operating earnings with a 5% discount rate and 25% growth rate,

• Amazon is overvalued by 35%. Fair value will be USD 2652. Amazons PE ratio is also extremely high at 70
• Alibaba is fairly valued. Which means the price is right. Current PE ratio is 19, which is decent.

Now lets come to conclusion, which is the better buy?

I personally think both companies are good addition to everyone's portfolio. E-commerce is a huge industry and a major growth potential for the future. While I think Alibaba has better growth potential, the risk associated with Alibaba through the VIE structure is also present.

Therefore, I would say add both these companies into your portfolio. Amazon has market share in the America and Europe side, while Alibaba has market share on the Asian countries. At the end of the day, both will still profit, make money and give shareholders the best returns.

Right now, Alibaba is at a good price, therefore u can buy it now. As for Amazon, you may have to wait abit, a scoop up the shares when the market emerges with more value.