Valuation Models and Stock Valuation: Evidence from E-commerce Industries

Sihan Wei ()
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Sihan Wei: Shanghai University of International Business and Economics, Finance Management School

A chapter in Proceedings of the 2025 International Conference on Financial Risk and Investment Management (ICFRIM 2025), 2025, pp 124-133 from Springer

Abstract: Abstract This study analyses the valuation of two e-commerce giants, Amazon and Alibaba, using the price-earnings ratio model and the Free Cash Flow Equity model (FCFE). According to the P/E model, Amazon’s stock has a high appreciation potential with a reasonable share price of $229.69 after 5 years, while Alibaba’s share price is expected to fall to $67.02. The free cash flow equity model shows that Amazon’s stock has high appreciation potential, with a reasonable share price of $229.69 after 5 years. The free cash flow equity model shows that Amazon’s current stock price is undervalued, with an intrinsic value of $172.34 per share, while Alibaba’s intrinsic value of $138.45 per share is also undervalued. The valuation difference between the two models is mainly due to different model assumptions and political uncertainty. Over the long term, Amazon stock is expected to make good returns. Alibaba has cross-market arbitrage opportunities. There are significant differences between the two companies in terms of target markets, product portfolios, and market competition. Amazon is more focused on the North American and European markets with a relatively concentrated product line. Alibaba, on the other hand, focuses on the Chinese and Asia-Pacific markets and has a more diversified business. This study provides investors with in-depth analyses and investment recommendations on these two e-commerce giants.

Keywords: Stock Valuation; Price Multiples; Discounted Cash Flow Model; E-commerce (search for similar items in EconPapers)
Date: 2025
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DOI: 10.2991/978-94-6463-748-9_15

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