3 Bets on the Fast-Growing, Overvalued Ecommerce Industry
While social distancing-driven ecommerce is slowing down this year, changing habits are expected to continue driving ecommerce sales. However, valuation remains something to watch.
The need for social distancing has become less of a driver for the ecommerce segment, which includes pureplays as well as traditional retailers with ecommerce capabilities. That’s because, as estimates from the Commerce Department indicate, some of the traffic that moved online during the initial months of the pandemic is moving back to stores.
Accordingly, ecommerce sales in the last quarter were 9.1% above 2Q20 (up 3.3% sequentially), with total retail sales increasing 28.2% (up 5.2% sequentially). Ecommerce accounted for around 13.3% of total U.S. retail sales, which is a tad lower than the preceding two quarters and also lower than the 15.7% share in the year-ago quarter. This year’s moderation in absolute growth numbers is because of difficult comps.
Ecommerce continues to grow strongly off a smaller base growing its share of the total retail pie. And this is helped by the race to digitization, consumer habits altering for good and supply chains adjusting to help the two sides meet.
So, growth is less of a negative for this group as is valuation, which remains rich despite the sell-off in the last few months. Stocks worth considering now are PDD, RVLV and GRUB.
Tech IPOs With Massive Profit Potential
In the past few years, many popular platforms and like Uber and Airbnb finally made their way to the public markets. But the biggest paydays came from lesser-known names.
For example, electric carmaker X Peng shot up +299.4% in just 2 months. Think of it this way…
If you had put $5,000 into XPEV at its IPO in September 2020, you could have cashed out with $19,970 in November.
With record amounts of cash flooding into IPOs and a record-setting stock market, this year’s lineup could be even more lucrative.See Zacks Hottest Tech IPOs Now >>
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Revolve Group, Inc. (RVLV): Free Stock Analysis Report
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