Amazon’s scale in the Internet space
Now, we’ll look at where Amazon (AMZN), the undisputed leader in the cloud space, stands in the Internet space in terms of its market capitalization. On February 23, 2018, Alphabet (GOOG), with its market capitalization of ~$783 billion continued to be the largest global player in the Internet space. Alphabet is ahead of Amazon, which has a market capitalization of just over ~$726 billion. China-based (FXI) Alibaba (BABA) and Baidu (BIDU) occupied third and fourth place on the list, while eBay (EBAY) came in fifth.
Enterprise value multiples
Now let’s look at Amazon’s EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) multiple. Amazon was trading at a forward EV-to-EBITDA multiple of ~27.3x on February 23, 2018. This metric was higher than Google’s multiple of ~11.4x but lower than Alibaba’s ~28.2x multiple. The metric for Baidu was 18.70x.
Amazon, Google, Alibaba, Baidu, and eBay don’t pay dividends. The Internet is a rapidly growing dynamic space where companies often prefer to reinvest their profits in business and expansion rather than lure investors and shareholders through dividends. However, many of the tech companies that are cash rich don’t mind paying dividends because many of their investors and shareholders view dividends as steady income, especially in the current scenario of increasing uncertainty and volatility.