Shopify, Uber and Carvana are among ecommerce companies expected to show the best sales growth through 2023. Shopify had a blowout fourth quarter, with sales rising 41% from a year earlier, the company reported Wednesday.
Sales are the main objective of a company working at the forefront of the shift to ecommerce. But Shopify’s stock fell as much as 19%, even after company reported results that came ahead of analysts’ expectations for revenue and earnings.
The above headline from Barron’s spells out the problem in this market environment for any highly valued tech stock: Even in a growing economy with better-than-expected retail sales , if a company’s own sales outlook for the months ahead disappoint investors, the stock can crash.
While we cannot predict which highly valued ecommerce companies might be next to disappoint investors, we can look ahead to see which are expected to increase sales the most quickly. A list of these expected rapid-growers derived from the holdings of three ecommerce exchange-traded funds is below.
A high valuation in a touchy market
Here’s a three-year price chart for Shopify Inc. SHOP through the close on Feb. 15 — that is, before the company announced its fourth-quarter results: FactSet The stock was up fivefold for three years before Shopify put out its fourth-quarter results. And the stock was trading for 14.5 times the consensus forward sales estimate among analysts polled by FactSet. That’s a very high valuation when compared with a price/sales valuation of 2.6 for the S&P 500 SPX and 2.9 for a venerable internet services highflyer such as Amazon.com Inc. AMZN.
Investors were paying through the nose for Shopify’s stock. Then again, the stock had traded as high as 47.1 times the consensus forward sales estimate in July 2020.
Three ecommerce ETFsIn order to come up with a list of ecommerce stocks […]
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