Comparison Of Apple Inc, Amazon Inc, And Netflix Inc

Apple’s competition varies depending on the product that is being compared. Apple has such a variety of products ranging from smartphones, watches, tv packages, desktops, laptops, tablets, their iPods and a plethora more, they have stiff competition along every product sold. Although their market cap is the highest in the world, Apple still doesn’t dominate every category their products are in. But the ones Apple has been conquering their competition in, they do with great numbers.

Samsung ended 2017 with 21.9% market share in the worldwide smartphone while Apple ended 2017 with 15.2% market share. (Reisinger 2018)

Apple Music has approximately 36 million paying subscribers. (Liptak 2018)

The Apple Watch in 2017 sold 18 million units. This was a 54% year over year growth from 2016. (Potuck 2018)

Apple’s competition comes from all over including Microsoft, Amazon, Dell, Samsung, Sony and Fitbit. With such tough competition it may seem hard to overcome but Apple has done a fantastic job by proving they are top of all their competition, according to their market cap.

Management

Prior to the death of Steve Jobs in 2011, he started Apple in 1976 and produced some of the very first computers that we know of. His innovation led Apple to becoming the powerhouse it is today. The management team that created the iPhone is arguably the most innovative team there is. This brought the internet to everybody's pocket, something that was never done before. This changed the world and how people could obtain information.

With the newly appointed CEO, Tim Cook, he has many ideas for the future. Apple previously purchased P.A Semi, a company that produces chips inside various Apple products, so they can now cut out Intel. Intel previously made components for them but will be phased out by the year 2020. (Vena 2018)

Amazon Inc. AMZN

Stock Price

Price

$ Change

5 years ago

$301.06

-

5 years ago

$631.00

$329.94

Current

$1,813.70

$1,182.70

Table 2.1

This current price reflects Amazon having a market cap of $874.38 Billion. This stock since inception has had the biggest increase out of the Apple and Netflix combined. Amazon’s initial public offering price in 1997 was $18 this is a $1,785.70 increase per share to the current stock price. And ever since 2010 it has yet to be below the $100 mark. This stock has 485 million outstanding shares, much less than Apple. This allows the stock to be more volatile and be able to move anywhere from $10 to over $100 a week.

Amazon’s all time high price is $1,858.88 but with their earnings report coming on July 26, 2018 it has a very realistic goal to hitting new all time highs. Although it's not that close to the $1 trillion market cap, a good earnings report followed by the holidays coming up again, I can see

this stock being above $2,000 by years end or even sooner. Amazon has already doubled its

stock just from a year ago lows as well. The growth returns on this stock have been nearly doubling year over year, and don’t see that stopping anytime soon.

Competition

The competition to Amazon is almost hard to recognize. Amazon is an online marketplace that sells nearly anything and everything a consumer can think of. With the help of over 550,000 employees world wide that helps their two day shipping to be unmatched for years, until Walmart has just recently entered that realm now. Although Walmart tries to keep up with Amazon it may seem impossible to. Amazon on January 10, 2018 recorded over 562 million products on their website. (ScrapeHero 2018)

Amazon’s smaller competitors refer to Ebay.com a company that has had much smaller success in the online marketplace by having a lousy $33 Billion market cap. Amazon has also been the cause of deaths to many brick and mortar stores.

Barnes & Noble - Amazon is now the world leader in book sales thanks to the help of the Kindle. Forbes estimates that the Kindle makes up about 19.5% of all global book sales. (Hankin 2018)

Costco - Costco’s subscription based “Price Club” took 24 years to reach 80 million subscribers. While Amazon Prime took 13 years to reach 90 million subscribers. (Hankin 2018)

Management

Amazon’s management has been outstanding since they started out as nothing but an online book seller in the early 1990’s. But that never stopped Jeff Bezo’s and his ambition to become the wealthiest person in the world with a net worth of over 110 billion dollars. His style of business growth started early in Amazon’s career as they first were only a book store but after five years of business, allowed second party sellers on their website. This is what Amazon is known for today.

But it didn’t stop there for Mr. Bezo’s, he moved in to cloud computing which is used by the U.S Government today. The purchase of many different business including the popular streaming app for gamers called Twitch, that produces revenue based on subscriptions. And with the purchase of Whole Foods in 2017, Amazon is effectively in every category available to make a profit.

Netflix Inc. NFLX

Stock Price

Price

$ Change

5 years ago

$35.75

-

5 years ago

$94.98

59.23

Current

$361.05

266.07

Table 3.1

With the current stock price of Netflix this values the company around the 157 billion dollar market cap. This stock price although is the second highest, the total market cap is well below that of Apple and Amazon. This is due to having approximately 434 million shares outstanding. That number of shares is still relatively small allowing this stock to have a much higher volatility and more range just like Amazon. Netflix has been the biggest percent gainer in the past five years compared to the other two, but in recent trading it has tumbled greatly due to its quarterly earnings report.

Competition

To no surprise one of the biggest and most prominent competitors to Netflix is Amazon Inc. Although Netflix still remains the go-to for it’s 100 + million subscribers worldwide there is still competition to come by. Competition for Netflix can be the deadliest out of the three company’s due to the subscribers wanting to pay cheaper prices if they can find them - for almost the same amount of streaming shows and movies. If any of these competitors can eventually produce better content for a cheaper price that could prove to be a big problem to Netflix.

Amazon Inc - Amazon Prime Video

21st Century Fox - Hulu Plus

Time Warner Cable - HBO

It is no surprise that when it comes to streaming there will be more companies looking to take advantage of the “cord-cutting” phenomenon. But in second quarter of 2017 59% of households had at least one subscription video service that they would use, almost always Netflix or Amazon (Moskowitz 2018).

Management

Netflix’s management has been one of the biggest surprises to me personally. The first of many problems and biggest obstacle they had to overcome was the goliath Blockbuster in the early 2000’s. Despite many investors never thinking that a company that started out shipping DVD’s and VHS tapes out to their customers would work, they were very wrong. From their start in 1998 they exclusively were only apart of the shipping out of movies and TV shows, and once they started to see their business falter due to competition the company acted and changed the way the world viewed content. In 2007 Netflix came up with the plan to start streaming which would propel their company to what they are today.

In early 2007 they released the subscription based streaming ability, which included approximately 1000 titles (Rodriguez 2017). This quickly gained traction and 11 years later they are now over the 110 million subscriber mark with having over 1000 hours of original content, compared to only about 600 hours to that of HBO (Moskowitz 2018).

Conclusion

The conclusion to this report of Apple Inc, Amazon Inc, and Netflix Inc follows. Although these stocks have had amazing returns, with some being better than others there has to be a better choice than the others.

Stock Price - Shows the technical analysis of the three companies and the SPY. Netflix in the last 5 years has had the best return on an investment by 430% compared to Amazon. Although this technical analysis will always point to Netflix having the best returns, it is about what the stock price will be in the future that counts. Apple has a respected price and with the dividend makes it a good contender but Amazon’s return and potential upside still remains the best choice.

Competition - There’s no hiding that all these companies have some of the toughest competitors in their field. But Amazon edges out all the others with its ability to have an extremely high percent of products on its website compared to their closest competitor, it makes it the best choice. Apple ventures out and has to rely on their own products to make their sales while Amazon still makes money from their second hand sellers. Netflix has too much competition just being a streaming site with limited growth.

Management - It’s a given to want the richest man in the world running the company you’re invested in. That makes Jeff Bezo’s the leader of the three CEO’s and the business he runs. His ability to create Amazon as a brand and not just a website anymore has been incredible, and other company’s fear that they will be put out of business by Amazon’s tactics. Apple’s management has been extremely innovative but hasn’t created a new product the world hasn’t seen in nearly 10 years. And Netflix needs to keep creating original content in order to remain dominant, but they have a limited growth opportunity compared to Apple and Amazon.