E commerce is all about how people will trade in the future; the way they buy, sell and make payments will be primarily online. The COVID-19 pandemic has signified the e-commerce industry, and we have seen how e-commerce companies have grown over the last 18-months. Not only that, many businesses have moved to online selling with the rising trend. Therefore, it is important to know the best three e commerce stocks.
Many of you might think that the growth of the e commerce industry might decelerate once the pandemic slows down. But that is not the case, the e-business has already proven its worth before the pandemic, and it will only grow with more competition in the market.
What should an investor take of that? That means investing opportunities in e commerce stocks for long-term growth. We have highly diversified players in this sector and will be going through the three best e commerce stocks in this article.
Alibaba Group Holding
If you’re looking for long-term growth, very few socks come close to Chinese e commerce stock. Alibaba (BABA) has been facing regulatory scrutiny lately, but the company’s solid customer base and market position seduce BABA stock.
However, let’s clear the air first. Will BABA really rebound? Markets and political situations have left BABA shareholders under a lot of pressure recently. Alibaba’s shares have dropped to the lowest level in three years. After trading above $260 per share earlier in 2021, things seem to be the opposite.
The lower share price of BABA stock puts it in a more considerable upside. Once the regulatory issues clear, the company will skyrocket with its stock. Alibaba’s 35% year-over-year sales growth in 2020 highlighted its continued dominance in the Chinese e commerce sector.
E Commerce stocks: Common Prosperity Initiative
The company is focusing on investments that will expand its user base and increase the usage of its platforms. Alibaba plans to invest $15.5 billion in support of President Xi Jinping’s “common prosperity” initiative. As per the reports, the funds given by Alibaba will support small businesses and gig workers.
Alibaba is consistently improving its growth across different sectors. In the recent quarterly report on August 3, 2021, the company posted a 22% rise in quarterly profit. While the revenue increased 46% to $31.9 billion and the Cloud computing revenue increased 29% to $2.49 billion. The active annual users increased by 45 million from the last quarter.
It’s hard to find a company with a more impressive track record of growth than Alibaba. The company has a five-year annualized earnings growth rate of 29%. Overall, analysts are pretty bullish on the stock and have a price target ranging from $190 to $336, according to data collected by TipRanks. At the same time, the Bank of America has a ‘buy rating and a $285 price target for BABA stock.
Etsy (ETSY) has emerged as one of the leading e commerce stocks during the pandemic. The company primarily sells artwork, crafts, vintage items, and other unique goods. Additionally, the platform offers apparel, home decorations, and accessories as well.
The increasing demand for crafts during the pandemic has lifted ETSY stock. Even now, it’s trading with a 500% gain since its pandemic era low. Therefore, what makes Etsy a good investment option?
In the long-term, of course, Etsy will have the benefit of being an e commerce firm, but where does the company stand?
Second quarter of 2021 for Etsy
During the second quarter of 2021, the Chief Financial Officer, Rachel Glaser, addressed the analysts regarding the firm’s current position. Rachel said that despite the reopening of physical shops and consumer spending patterns shift, the underlying growth and buyer cohort trends remain encouraging in Etsy’s core marketplace.
With the following trend change, the company was expecting fewer new buyers. But the e-commerce firm still added 8 million new buyers. That is almost double the number of new buyers acquired in the second quarter of 2019.
The short-term trends will continue to shift based on the ongoing market circumstances. However, Etsy stock looks solid in the long term. Analysts believe that the company’s best-in-class combination of growth and profitability is a key reason for future upside. At the same time, Etsy is expanding its operations across the board this year.
E Commerce Stocks: Depop Investment in Etsy
Moreover, the recent investment in Depop and Elo7 adds two new streams to generate revenue. Depop is a community-based apparel marketplace that mainly caters to Gen Z. This will allow Etsy to enter its wares and offerings to new markets. Meanwhile, the acquisition of Elo7 will help Etsy to expand in the more prominent Brazilian e commerce market. These two growth moves have highly impressed the analysts.
Jefferies analyst John Colantuoni believes that the company has impressed with its guidance, and it could experience accelerating growth in the back half as comparisons ease. Another analyst from Canaccord Genuity maintained a Buy rating on Etsy and a price target of $270.
In the long-term, the market will expand, providing more opportunities for Etsy to further grow its footprint in the market. What do you think of ETSY stock in the long term? Let us know your opinion in the comment box.
eBay (EBAY) is one of the most exciting e commerce stocks that could really make its investor a millionaire in the coming years. The company has a global marketplace and operates via its website and mobile app.
EBAY stock has performed pretty well on both an absolute and relative basis in 2021. eBay’s shares have soared over 36% year-to-date compared to the S&P 500, the Dow Jones, and the Nasdaq Composite. The following indices soared over 14%, 11%, and 11%, respectively.
One good thing about eBay stock is that it’s fairly valued. The stock has relatively low forward EBITDA valuations compared with other e commerce companies’ modest revenue growth expectations.
eBay is currently making some significant changes to its $1 billion advertising business. The focus is to overrun the peers in the market like Walmart, Amazon, and Instacart. Therefore, eBay wants more advertisers and wants to step up its Ads game. The company generates most of the Ad revenue from its unit called Promoted Listings.
Currently, eBay is focusing on improving its revenues from Promoted Listings and other streams to ensure portability in the long term. We usually opt for firms with long-term profitability, and eBay doesn’t precisely lie in that bracket. However, the long-term upside is promising with other stock indicators and the overall market growth expectations.