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Jeff Bezos of Amazon. Photo: Ted S. Warren

Walmart is worth half as much as Amazon but has paid 46 times more income tax since 2008 — $64 billion versus Amazon's $1.4 billion, writes Scott Galloway, an NYU marketing professor.

"The most uncomfortable question in business, in my view, is how do we pay our soldiers, firefighters, and teachers if a firm can ascend to $460 billion in value (#5 in the world) without paying any meaningful corporate taxes," writes Galloway, author of the forthcoming The Four, an examination of Big Tech.

Why Amazon pays so little: Amazon is worth a lot to investors, but since its founding has plowed almost all its profit back into the business: Since 2008, Walmart has earned $229 billion before tax and paid dividends; Amazon has reported just $14 billion in profit, with no annual cash payout to shareholders.

Investors are patient: Amazon shareholders have met this strategy with patience, which can be seen in the ratio of its stock price to profits over the past twelve months. The most valuable company in the world, Apple, is worth roughly 18 times more than it earned in profits over the past year, while the second most, Google, is worth 33 times. For Amazon, that figure is a whopping 247.

  • Apple, Google, and Amazon have similar public profiles — they are ultra-powerful tech companies that have grown to dominate their respective markets over the past two decades.
  • But Wall Street sees them as completely different beasts. The relatively low ratios of price to profits for Google and Apple indicate that investors see them as mature and predictable.
  • Amazon, on the other hand, is still viewed as a growth company whose ultimate potential is still unknown.

Why it matters: For Amazon to justify its price-to-earnings ratio, it will eventually have to report much higher profits, and there is no indication that it will do this by raising prices and cutting back investment in itself.

Go deeper

Janet Yellen confirmed as Treasury secretary

Janet Yellen. Photo: Alex Wong/Getty Images

The Senate voted 84-15 to confirm Janet Yellen as Treasury secretary on Monday.

Why it matters: Yellen is the first woman to serve as Treasury secretary, a Cabinet position that will be crucial in helping steer the country out of the pandemic-induced economic crisis.

Dan Primack, author of Pro Rata
3 hours ago - Economy & Business

Scoop: Red Sox strike out on deal to go public

Illustration: Sarah Grillo/Axios

The parent company of the Boston Red Sox and Liverpool F.C. has ended talks to sell a minority ownership stake to RedBall Acquisition, a SPAC formed by longtime baseball executive Billy Beane and investor Gerry Cardinale, Axios has learned from multiple sources. An alternative investment, structured more like private equity, remains possible.

Why it matters: Red Sox fans won't be able to buy stock in the team any time soon.