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 41% year-to-date, considerably underperforming the Nasdaq-100, which remains down by 24% over the same period. There are several trends that are hurting the sector. The big e-commerce surge that was seen through the lockdown phase of the Covid-19 pandemic is now cooling off, and this is reflected in revenue growth rates and stock prices in the theme. Moreover, the U.S. economy has been weak with GDP contracting over the last two quarters straight. Consumers have also been scaling back on retail spending amid high inflation while spending more on travel and experiences. Moreover, the ongoing supply chain issues, labor shortages, and surging inflation are also impacting the cost base of e-commerce players.
Although we think that the long-term outlook for e-commerce stocks remains intact, the near-term outlook for the theme remains mixed. For Q3 2022, e-commerce bellwether Amazon is guiding for year-over-year sales growth of between 13% and 17% for Q3, marking an improvement from a growth rate of just about 7% in Q2. While this is likely to be driven partly by the company’s cloud computing business, the e-commerce business could also pick up a bit versus recent quarters. That said, returns from growth themes such as e-commerce could still face some pressure as the Federal Reserve continues its hawkish stance to combat inflation, despite the broader economic slowdown.
Within our theme, Carvana stock (NASDAQ:CVNA) has been the weakest performer, declining by about 85% year-to-date. Wayfair (NYSE:W) has also declined considerably, falling by 73% year-to-date. On the other side, logistics players FedEx stock (NYSE:FDX) and UPS stock (NYSE:UPS) have fared a bit better, declining by about 16% and 6%, respectively.
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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.
|S&P 500 Return||-2%||-15%||81%|
|Trefis Multi-Strategy Portfolio||-2%||-15%||239%|
 Month-to-date and year-to-date as of 8/29/2022
 Cumulative total returns since the end of 2016