Our theme of E-Commerce Stocks – which is comprised of U.S.-based e-commerce companies as well as logistics, and payment players, has returned about 23% year-to-date, roughly in line with the S&P 500, which remains up by about 22% over the same period. We think the near-term outlook for e-commerce is looking more positive as a concerning and highly mutated new strain of the coronavirus prompts fears of renewed lockdowns and travel restrictions. The new variant, dubbed Omicron, could be more transmissible and is also believed to pose a higher risk of reinfection versus the Delta variant of the virus, which is currently the dominant strain worldwide. It also remains to be seen whether the current set of Covid-19 vaccines will be as effective against the new variant. While spending at brick and mortar stores was poised to pick up through the holidays, it’s possible that the discovery of the new virus variant could make people a bit more cautious about venturing out, helping e-commerce sales not just for discretionary items but also necessities.
Within our theme, Etsy Stock (NASDAQ:ETSY) has been the strongest performer, rising by about 64% year-to-date. On the other side, PayPal stock (NASDAQ:PYPL) has been the weakest performer, declining by about 20% year-to-date. While e-commerce players are gaining at the expense of brick and mortar retailers, 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.
[8/9/2021] E-Commerce Stocks Look Attractive Following Post Earnings Sell-Off
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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 about 7% over the last month, compared to the S&P 500 which rose 1.5% over the same period. While second-quarter earnings turned out stronger than expected for most e-commerce companies that have reported results, mixed Q3 guidance and expectations of slowing growth post the Covid-19 lockdowns appear to have hurt sentiment for the fast-growing sector. For instance, e-commerce bellwether Amazon saw revenue growth slow to 27% year-over-year in Q2 201, down from about 44% in Q1, while noting that growth could slow further in Q3 to about 13.5%, based on the mid-point of guidance.
That being said, we think the recent decline presents an opportunity to enter the sector. Covid-19 cases in the U.S. are on the rise once again, driven by the spread of the highly infectious Delta variant of the virus. The seven-day average infection rate in the U.S. has risen from 22,000 in early July to over 100,000 cases presently. This could delay the re-opening of workplaces and keep people at home for a few more quarters, helping e-commerce stocks in the near term. Moreover, while there was already a secular shift to online shopping prior to Covid-19, the pandemic is likely to accelerate this trend, given the changes in consumer behavior through months of lockdowns, helping these stocks in the longer run.
[7/8/2021] Why E-Commerce Stocks Are Still A Buy
Our theme of E-Commerce Stocks – which is comprised of U.S.-based e-commerce companies as well as logistics, and payment players – is up by 25% year-to-date, outperforming the broader Nasdaq-100 which is up by about 17% over the same period. The gains come despite the fact that the brick and mortar retail is opening up following Covid-19, with over half of U.S. adults now vaccinated and Covid cases on the decline. Now, e-commerce was gaining share from physical retail prior to Covid, and investors are likely betting that the pandemic is only likely to bolster the shift to online shopping, given the changes in consumer behavior through months of lockdowns. For example, research firm eMarketer estimates that U.S. retail e-commerce sales will grow by 13.7% this year and by 15% next year, with consumers expected to spend over $1 trillion via digital retail channels in 2022. 
Within our theme, eBay (EBAY) stock has been the strongest performer, rising by about 39% year-to-date, driven by stronger demand growth and also due to its lower valuation multiples which have helped it capitalize on the broader rotation from high-growth to value stocks over the last few months. On the other side, Etsy (ETSY) a platform focused on handmade products, vintage items, and craft supplies, has been the worst performer within our theme, with its stock gaining just about 8%, amid weaker earnings guidance, as it faces a tough comparison with a solid pandemic year.
[4/6/2021] Will The Third Stimulus Check Help E-Commerce Stocks?
Our theme of E-Commerce Stocks – which includes U.S-based e-commerce platform players as well as logistics, and digital payment companies – is up by about 14% year-to-date, compared to the S&P 500 which is up by about 9% over the same period. The theme is also up by a solid 151% since the end of 2019, compared to a 26% return on the S&P 500. While investors have been rotating out of software and other high-growth stocks as the economy continues to open up following Covid-19, most e-commerce names in our theme have held up as investors likely expect e-commerce to continue eating into retail sales even post the pandemic. Moreover, it’s likely that a sizeable amount of the stimulus checks being mailed out as part of the $1.9 trillion Covid-19 rescue package will flow toward digital commerce spending, helping these companies. Within our theme, Wayfair (NYSE:W) a company that sells furniture and home goods online, has been the strongest performer with its stock up by about 43% year-to-date. On the other side, e-commerce bellwether Amazon (NASDAQ:AMZN) has underperformed with its stock remaining roughly flat year-to-date.
[3/18/2021] E-Commerce Stocks To Watch
Our theme of E-Commerce Stocks includes U.S-based e-commerce platform players, logistics, and digital payment companies that stand to gain as shopping continues to move online. The e-commerce market has expanded significantly over the last year as the Covid-19 pandemic accelerated the shift away from brick and mortar stores to digital shopping, not just for discretionary items but also necessities. For perspective, e-commerce as a percentage of overall U.S. retail sales jumped from around 16% in 2019 to almost 21% in 2020.  There’s a lot more room for the market to grow, considering that the total U.S. retail market stood at about $4 trillion in 2020. Our theme has outperformed the broader markets significantly, returning about 151% since the end of 2019, versus about 23% for the S&P 500. The theme is also up 11% year-to-date, compared to about 6% for the S&P 500. Below is a bit more about some of the companies in our theme and how they have fared.
Etsy (ETSY) an e-commerce platform that focuses on handmade products, vintage items, and craft supplies had a solid run through the pandemic, as gross merchandise sales, active buyers, and sellers on its platform soared. We think the company should continue to do well post the pandemic, as it could become the go-to platform for unique items that may not be available locally. The stock is up by about 388% since the end of 2019.
Wayfair (W), an e-commerce company that sells furniture and home goods, benefited from the trends of sheltering at home – which raised the demand for home improvement and the growing shift to e-commerce. The company is also building a very loyal base of customers, with more than two-thirds of its orders over its last quarter coming from repeat customers. The stock has gained a solid 248% since the end of 2019.
Carvana (CVNA) is an online used car retailer. Demand for used cars soared through Covid-19, as people look to avoid public transport. Moreover, customers shifted to e-commerce for buying cars as they remained averse to traditional in-person buys. The stock is up by about 208% since the end of 2019.
PayPal Holdings (PYPL) operates a worldwide online payments system that supports online money transfers. The stock has gained about 130% since the end of 2019, as people have preferred digital payment mediums through the Covid pandemic. Moreover, the company’s move to allow users to buy, sell, and hold select Cryptocurrencies such as Bitcoin on its app has also helped its stock.
FedEx (FDX) stock is up by about 72% since the end of 2019. Although the company has seen some headwinds in recent years, as major customer Amazon doubled down on investments into its own logistics operations, the Covid-19 pandemic caused e-commerce shipments by the company to pick up. E-commerce should remain a tailwind, with the company expecting e-commerce package deliveries to more than triple to 111 million per day by 2026, up from about 35 million in 2019.
Amazon (AMZN), the e-commerce pioneer, saw demand for both its cloud computing business – Amazon Web Services – and its core online retail business soar through the pandemic, with revenue jumping by a solid 38% last year to about $386 billion. Amazon stock is up by about 67% since the end of 2019.
What if you’re looking for a more balanced portfolio instead? Here’s a high-quality portfolio that’s beaten the market consistently since the end of 2016.
|S&P 500 Return||1%||22%||105%|
|Trefis MS Portfolio Return||-3%||46%||297%|
 Month-to-date and year-to-date as of 11/29/2021
 Cumulative total returns since 2017
- How will the pandemic affect US eCommerce sales in 2021? , eMarketer [↩]