Etsy, Amazon, EBay: Why E-Commerce Stocks Are Still A Buy

UKRAINE – 2020/11/07: An eBay logo is seen on a smartphone screen in front of the Ebay homepage in this photo illustration. (Image courtesy of Pavlo Gonchar/SOPA Images/LightRocket/Getty Images)
Getty Images/SOPA Images/LightRocket
Our E-Commerce Stocks theme, which includes U.S.-based e-commerce companies as well as logistics and payment providers, is up 25% year to date, outpacing the wider Nasdaq-100, which is up around 17%. Despite the fact that brick-and-mortar retail is opening up as a result of Covid-19, with over half of all adults in the United States now vaccinated and Covid cases on the decline, the gains come despite the fact that brick-and-mortar retail is opening up as a result of Covid-19. Now, previous to Covid, e-commerce was gaining market share from physical retail, and investors are likely betting that the epidemic will further accelerate the transition to online buying, given the changes in customer behavior caused by months of lockdowns. According to eMarketer, retail e-commerce sales in the United States will expand by 13.7 percent this year and 15 percent next year, with customers estimated to spend more than $1 trillion through digital retail channels in 2022. [1] Within our theme, eBay (EBAY) has been the best performer, up nearly 40% year-to-date, owing to greater demand growth and lower valuation multiples, which have allowed it to profit from the broader shift from high-growth to value companies in recent months. On the other hand, Etsy (ETSY), a marketplace for handcrafted goods, vintage items, and craft supplies, has been the weakest performer in our theme, with its stock up just over 8% with reduced profits guidance, as it compares to a strong pandemic year.
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Our E-Commerce Stocks theme, which comprises U.S.-based e-commerce platform providers as well as logistics and digital payment companies, is up around 14 percent year to date, compared to the S&P 500, which is up approximately 9%. Since the end of 2019, the theme has returned a whopping 151 percent, compared to a 26 percent gain for the S&P 500. While investors have been exiting software and other high-growth firms as the economy continues to open up in the aftermath of Covid-19, most e-commerce businesses in our theme have held up, indicating that investors believe e-commerce will continue to cut into retail sales even after the epidemic. Furthermore, it’s likely that a significant portion of the $1.9 trillion Covid-19 rescue package’s stimulus checks will go toward digital commerce spending, which will benefit these businesses. Wayfair (NYSE:W), a firm that sells furniture and home items online, has been the best performer in our topic, with its stock up about 43% year to date. On the other hand, Amazon (NASDAQ:AMZN), the e-commerce behemoth, has underperformed, with its stock holding about flat year-to-date.
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E-Commerce Stocks is a theme that covers U.S.-based e-commerce platform players, logistics firms, and digital payment companies that stand to benefit as purchasing moves online. The Covid-19 pandemic has expedited the shift away from physical and mortar retailers to digital shopping, not just for discretionary items but also for essentials, and the e-commerce market has grown dramatically in the recent year. To put things in perspective, e-commerce sales as a percentage of total retail sales in the United States increased from roughly 16 percent in 2019 to around 21 percent in 2020. [1] Given that the whole U.S. retail market was estimated to be around $4 trillion in 2020, there is plenty of room for the market to expand. Since the end of 2019, our theme has outperformed the broader markets by around 151 percent, compared to about 23 percent for the S&P 500. In addition, the theme is up 11% year to date, compared to around 6% for the S&P 500. Here’s a little additional information about some of the companies in our topic, as well as how they’ve fared.
Etsy (ETSY), an e-commerce portal specializing in handcrafted goods, vintage things, and craft supplies, had a strong run during the pandemic, with gross merchandise sales, active buyers, and sellers all increasing. We believe the firm will do well after the epidemic because it has the potential to become the go-to platform for unusual things that aren’t available locally. Since the end of 2019, the stock has risen by nearly 388 percent.
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Wayfair (W), an e-commerce firm that offers furniture and home items, benefited from the rising demand for home remodeling and the shift to e-commerce. The company is also establishing a strong client base, with repeat customers accounting for more than two-thirds of its orders in the most recent quarter. Since the end of 2019, the stock has increased by 248 percent.
Carvana (CVNA) is a used automobile retailer that operates online. During Covid-19, demand for used vehicles increased as individuals sought to avoid use public transportation. Customers also turned to e-commerce for automobile purchases, while they remained wary of traditional in-person purchases. Since the end of 2019, the stock has risen by nearly 208 percent.
PayPal Holdings (PYPL) is a company that runs a global online payment system and facilitates online money transfers. People have favored digital payment means through Covid pandemic, and the stock has grown nearly 130 percent since the end of 2019. Furthermore, the company’s decision to allow customers to purchase, sell, and hold chosen Cryptocurrencies like Bitcoin via its app has aided the stock’s performance.
Since the end of 2019, the stock of FedEx (FDX) has increased by nearly 72 percent. Despite some hurdles in recent years, as key customer Amazon increased its investments in its own logistical systems, the Covid-19 outbreak sparked an increase in e-commerce shipments by the company. E-commerce should continue to be a positive factor, with the company projecting that daily e-commerce package deliveries will more than triple to 111 million by 2026, up from around 35 million in 2019.
During the pandemic, Amazon (AMZN), the e-commerce pioneer, saw demand for both its cloud computing company – Amazon Web Services – and its main online retail business skyrocket, with sales soaring by a healthy 38% to almost $386 billion. Since the end of 2019, Amazon’s stock has risen by about 67 percent.
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Notes: How will the pandemic effect e-commerce sales in the United States in 2021? , [?] eMarketer/nRead More