According to Adobe Analytics’ Digital Economy Index, Black Friday online sales dipped to $8.9 billion for the first time ever. The reason is that the retailers had started offering deals earlier in October, and strategic shoppers grabbed those opportunities for the best deals. Furthermore, the threat of supply chain disruptions and delivery delays made shopaholics take advantage of the early discounts.
Although retailers had a rough phase last year due to the pandemic, decrease in consumer spending, and supply chain bottlenecks, they rebuilt themselves and generated better revenues this year due to increased in-store traffic and online sales. However, since the early attractive deals offered by retailers changed the shopping patterns and led to a decline in Black Friday’s online sales, it would be wise to avoid fundamentally weak retail stocks.
We believe e-commerce stocks Amazon.com, Inc. (AMZN) and eBay Inc. (EBAY) are best avoided now.
Amazon.com, Inc. (AMZN)
With a market capitalization of $1.78 trillion, AMZN is a global e-commerce giant. The company operates through North America; International; and Amazon Web Services (AWS) segments. The company has also been referred to as “one of the most influential economic and cultural forces in the world,” ranks two on Fortune 500 list.
AMZN’s total net sales increased 15.3% year-over-year to $110.81 billion in the third quarter ended September 30, 2021. However, the company’s total operating expenses grew 17.8% from the year-ago value to $105.96 billion. Its operating income decreased 21.7% from the prior-year quarter to $4.85 billion. Also, the company’s net income declined 50.2% year-over-year to $3.16 billion.
AMZN’s EPS is expected to decrease 73.5% in the current quarter. The stock has lost 2.1% over the past five trading days.
AMZN’s POWR Ratings are consistent with this bleak outlook. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
Also, the stock has a D grade for Value and Growth. We’ve also graded AMZN for Quality, Sentiment, Momentum, and Stability. Click here to access all of AMZN’s ratings. AMZN is ranked #42 of the 77 stocks in the F-rated Internet industry.
eBay Inc. (EBAY)
The global -commerce company, EBAY, operates marketplace platforms that connect buyers and sellers worldwide. The company offers developer tools and transaction processing, a database, and a network that virtually allows buyers and sellers to complete transactions.
Last month, EBAY acquired Sneaker Con Digital, a sneaker authenticator with operations in the U.S., U.K, Canada, Australia, and Germany. Although this acquisition may bring trust and confidence to the customers, it could weigh heavily on its expenses in the coming months.
During the third quarter ended September 30, 2021, EBAY’s net revenues increased 10.8% year-over-year to $2.5 billion. However, the company’s total operating expenses grew 3.8% from the year-ago value to $1.16 billion. Its net income decreased 60.2% from the prior-year quarter to $264 million. Also, the company’s EPS declined 57.4% year-over-year to $0.4.
The stock has declined 12.1% over the past month and 13% over the past three months.
EBAY’s poor prospects are also apparent in its POWR Ratings. The stock has a D grade for Sentiment and Growth.
In addition to the POWR Rating grades I’ve just highlighted, one can see EBAY’s ratings for Stability, Quality, Value, and Momentum here. EBAY is ranked #17 in the same industry.
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AMZN shares were trading at $3,477.57 per share on Wednesday afternoon, down $29.50 (-0.84%). Year-to-date, AMZN has gained 6.77%, versus a 23.62% rise in the benchmark S&P 500 index during the same period.
About the Author: Priyanka Mandal
Priyanka is a passionate investment analyst and financial journalist. After earning a master's degree in economics, her interest in financial markets motivated her to begin her career in investment research. More...
More Resources for the Stocks in this Article
| Ticker | POWR Rating | Industry Rank | Rank in Industry |
| AMZN | Get Rating | Get Rating | Get Rating |
| EBAY | Get Rating | Get Rating | Get Rating |
