Last week’s sharp sell-off in online shopping giant Amazon (AMZN:NASDAQ) is a warning to investors as several big ecommerce companies ready their own earnings reports this week.
Online auction and shopping platform Ebay (EBAY:NASDAQ) and arts and crafts website Etsy (ETSY:NASDAQ) will report quarterly earnings after the trading close on Wednesday (4 May 2022), with Wayfair (W:NYSE), Shopify (SHOP:NYSE) and Mercadolibre (MELI:NASDAQ) following on Thursday. Investors could be in for a volatile ride in the wake Amazon’s biggest one day fall since 2006.
It’s a canary in the coal mine,’ said Oktay Kavrak, a director and product strategist at Leverage Shares. ‘If Amazon is hitting a speed bump, other names could crash,’ he told Bloomberg. ‘People were expecting a slowdown in growth following the pandemic, but I don’t think they expected as drastic a drop as we saw.’
Lockdowns during the teeth of the Covid outbreak sparked a huge rally in online commerce businesses but Amazon’s weaker-than-expected revenue forecast stoked fears of slowing ecommerce growth as consumer shopping habits return to pre-pandemic normality and inflation cools spending.
Shopify, the Canadian company whose platform allows businesses to move online easily, has lost 64% of its value so far in 2022 as analysts slashed growth estimates, the worst performing of the five companies mentioned above. For the quarter to 31 March 2022, analysts see earnings 13.5% lower than for the same period last year despite forecasting a 44% revenue rise.
