Our theme of E-Commerce Stocks, which is comprised of U.S.-based e-commerce companies as well as logistics and payment players, has declined by almost 51% year-to-date, considerably underperforming the Nasdaq-100, which remains down by 29% over the same period. While the theme has been impacted by the easing of Covid-19 tailwinds, surging inflation, and the Federal Reserve’s aggressive rate hikes which have hurt growth stocks, there have been some positive developments for the sector, as well. Despite the current headwinds, the holiday shopping season appears to be off to a reasonably strong start. Per Adobe Analytics, U.S. consumers spent a record $9.1 billion online this Black Friday, marking an increase of about 2.3% versus last year. Cyber Monday is expected to be an even bigger shopping day. Similarly, Canadian e-commerce major Shopify said that it saw Black Friday sales rise 17% year-over-year to $3.36 billion.
Although the economic situation could remain mixed, as the Fed continues with its rate hikes, we think that the risk-to-reward positioning of the e-commerce theme looks attractive at current levels. The secular shift from physical commerce to e-commerce is likely to continue over the long run. Valuations are also looking reasonably attractive. For instance, e-commerce bellwether Amazon (NASDAQ:AMZN) stock now trades at under 2x sales, down from over 4.5x previously, while eBay stock trades at just about 2.5x. Within our theme, Carvana stock (NASDAQ:CVNA) has been the weakest performer, declining by over 90% year-to-date. Wayfair (NYSE:W) has also declined considerably, falling by over 80% year-to-date. On the other side, logistics player UPS stock (NYSE:UPS) has fared a bit better, declining by about 15%.
While e-commerce players are poised to gain at the expense of brick-and-mortar retailers in the long run, check out our theme of Fintech Stocks for a list of companies that could potentially disrupt the $1.5 trillion-plus U.S. insurance and financial services industry.
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|S&P 500 Return||4%||-16%||80%|
|Trefis Multi-Strategy Portfolio||4%||-19%||221%|
 Month-to-date and year-to-date as of 11/28/2022
 Cumulative total returns since the end of 2016
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