Source: Amazon

April 25 was a bad day to own shares of (NASDAQ:AMZN). Despite revenue that exceeded forecasts and earnings that fell in line with what analysts anticipated, shares of the e-tailer plummeted 10% to close at $303.83 on a mixed outlook. Since then, shares have inched up less than 1%.  Now, with the company's shares trading at a 26% discount to their 52-week high, should the Foolish investor consider buying the business, or would rivals like eBay (NASDAQ:EBAY) or (NASDAQ:OSTK) serve as more appealing prospects?

Amazon had a great quarter but has mixed feelings about its prospects!
For the quarter, Amazon reported revenue of $19.74 billion. Although this is less than 2% above the $19.43 billion investors expected, it represents a 23% jump compared to the $16.07 billion the company posted in the same quarter last year.

On a nominal basis, the largest contributor to Amazon's higher sales was its product sales, which increased 18% from approximately $13.3 billion last year to $15.7 billion this year. On a percentage basis, however, the company's service revenue soared the most, skyrocketing an impressive 44% from $2.8 billion to about $4 billion.

Looking at profitability, Amazon still performed well but not quite as well as it did in terms of revenue growth. For the quarter, the company reported earnings per share of $0.23, spot-on with what Mr. Market wanted to see and a whopping 28% above the $0.18 management reported during the same quarter a year earlier. In addition to benefiting from higher revenue, the company saw its cost of sales drop from 73.4% of sales to 71.2%. This was, however, partially offset by the company's technology and content expenses, which rose from 8.6% of sales to 10.1%.

  Forecast Actual Last Year's
Revenue $19.43 billion $19.74 billion $16.07 billion
EPS $0.23 $0.23 $0.18

Source: Yahoo! Finance and Amazon

At first glance, these numbers look strong. And most investors might think that Amazon exceeding Mr. Market's expectations would send shares up, not down. While this is generally the case, the Foolish investor would be wise to factor in management's outlook for its next quarter. If the company is accurate, Amazon should report revenue growth of between 15% and 26% during the quarter compared to the second quarter of 2013, but this is expected to come at the cost of profitability.

For the quarter, the company expects to report an operating loss of between $55 million and $455 million compared to the $79 million gain the business reported during the second quarter of 2013. Despite higher revenue, an increase in the amortization of intangible assets and stock-based compensation estimated to be worth $455 million should negatively impact Amazon's bottom line.

But how does Amazon look when stacked against eBay?
Over the past five years, Amazon has experienced an amazing growth spurt. Between 2009 and 2013, the company reported that revenue soared 204% from $24.5 billion to $74.5 billion. This jump in sales has been mostly chalked up to the company's revenue growth in North America, which rose dramatically as a greater number of sellers used the company's platform to list their products.

AMZN Revenue (Annual) Chart

AMZN Revenue (Annual) data by YCharts

Like Amazon, eBay has also enjoyed attractive growth but not to the same extent that Amazon has. Between 2009 and 2013, the company claimed that revenue increased 84% from $8.7 billion to $16 billion. Just as in the case of Amazon, eBay enjoyed strong growth domestically, but the company's recent performance abroad has been quite strong as well. Over the past three years alone, eBay's international segment saw revenue climb 35%, just slightly slower than the 41% growth experienced in the U.S. also did really well, but fell short of both Amazon and eBay. Between 2009 and 2013, the company's revenue climbed just 49% from $876.8 million to $1.3 billion.  According to the company, its rise in revenue in recent years has been driven by increased order sizes coming primarily from its Fulfillment Partner operations and stemming from increased home and garden sales.

From a revenue standpoint, Amazon looks like the clear winner. Unfortunately for the company, however, it plays second fiddle to eBay when it comes to profits. Over the past five years, the company's net income actually dropped 70% from $902 million to $274 million as higher costs, particularly in research and development, have increased at a pace far faster than its revenue.

AMZN Net Income (Annual) Chart

AMZN Net Income (Annual) data by YCharts

In contrast, eBay has seen its bottom line rise about 20% from $2.4 billion to $2.9 billion. Even in spite of higher research and development expenditures, the business was positively affected by a decline in its selling, general, and administrative expenses in relation to sales.

The biggest percentage gainer in terms of profitability over this timeframe has actually been, which has seen its net income jump 1,049% from $7.7 million to $88.5 million.  However, if you remove the company's $72.2 million income tax benefit from 2013, its bottom line increased only 109%, driven largely by an increase in revenue and a decline in research and development expenditures.

Foolish takeaway
As we can see, Amazon had a relatively strong quarter. But management's dour outlook has investors worried that the business is focusing too much on growth and rewarding insiders and not emphasizing shareholder returns enough. In the long run, the company's strategy could pay off handsomely but only if management can convert its short-term shortfalls into long-term advantages.

For the Foolish investor who believes in the company's path and who is alright waiting a long time, Amazon could be a profitable investment; but for anybody who wants to play it safer with a business sporting consistent profits, eBay might make for a better prospect.

Daniel Jones has no position in any stocks mentioned. The Motley Fool recommends and eBay. The Motley Fool owns shares of and eBay. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.