The 2020 pandemic hit many companies hard, while other companies took it as a chance to grow, seemingly unaffected by the state of the world around them. NVIDIA (NASDAQ:NVDA) came out as one of those thriving businesses and achieved gains of 122% in 2020. The company’s graphics processing units (GPUs) were present and needed for trends that accelerated exponentially due to the pandemic, boost...
The pandemic hit most businesses around the world like a truck. Some have managed to remain afloat, while others have suffered greatly. All-in-all, a post-pandemic world is just over the horizon, and many companies are looking promising to generate more reliable returns after the pandemic ends.
Peloton (NASDAQ: PTON) and Amazon (NASDAQ: AMZN) have both managed to grow amidst the pandemic and have shown great potential for further growth.
Amazon’s sales skyrocketed as people became more inclined to order products online, causing ecommerce trends to grow exponentially. This has caused the company’s stock to rise over 60% in the last 12 months.
Peloton’s sales of exercise bikes and subscriptions are also on the rise, with gyms remain closed. While it may not sound like too much of a case for Peloton, its stock value flew up more than 300%.
Can Peloton be a better buy than one of the world’s largest companies?
How will each company fare in a post-pandemic world?
Amazon’s revenue rose 38% to over $386 billion dollars in 2020. 61% of this revenue was generated from North America, 27% from its international marketplaces and the rest from AWS (Amazon Web Services).
The growth of AWS and the company’s marketplaces performing better than ever point for Amazon’s revenue to increase. Analysts estimate that revenue will increase by over 20%.
Amazon’s businesses are still solid. AWS is the top cloud platform by a significant amount, and its ecommerce system has over 150 million Prime members.
Things may get back to normal in terms of pandemic restrictions, but new trends have been created, and Amazon is more than ready to take advantage of that.
On the other hand, while it wasn’t profitable last year, Peloton generated a profit of $133 million in the first half of 2021. It also generated a positive adjusted EBITDA of $236 million, compared to a loss of $49 million last year.
It currently has 1.67 million subscribers and expects to double this year, with its revenue and adjusted EBITDA to increase with it.
The only thing that Peloton has against it is that it is unsure if people will continue to purchase its subscriptions and bikes after gyms reopen and normality comes back to everyday life. The company hopes its attractive subscriptions and new products will allow it to keep its current growth pace, but it’s anyone’s game after the pandemic ends.
The final call: Which is the better buy?
While both companies present an excellent investment opportunity, there has to be a better buy between the two. Peloton currently trades at 160 times forward earnings and six times sales for the following year. While those numbers look tantalizing and are supported by its current growth rate, they are still based on incredibly high expectations.
Amazon trades at 50 times forward earnings and three times this year’s sales. An accurate and well-founded value as Amazon could be better off and stabilize faster after the pandemic ends when investors will probably sell “pandemic stocks” and focus on companies that can expand further.
Peloton is still a good buy, but it’s dependant on speculations and high expectations coming true. While it is far from a bad investment, Amazon is the safer, better buy.