As the craze of earnings season draws to a close, here’s a look back at some of the most exciting (and some less so) results from Q2. Today, we are looking at online retail stocks, starting with Revolve (NYSE:RVLV).
Consumers ever rising demand for convenience, selection, and speed are secular engines underpinning ecommerce adoption. For years prior to Covid, ecommerce penetration as a percentage of overall retail would grow 1-2% annually, but in 2020 adoption accelerated by 5%, reaching 25%, as increased emphasis on convenience drove consumers to structurally buy more online. The surge in buying caused many online retailers to rapidly grow their logistics infrastructures, preparing them for further growth in the years ahead as consumer shopping habits continue to shift online.
The 6 online retail stocks we track reported a slower Q2. As a group, revenues beat analysts’ consensus estimates by 0.6% while next quarter’s revenue guidance was 1.3% below.
After much suspense, the Federal Reserve cut its policy rate by 50bps (half a percent) in September 2024. This marks the central bank’s first easing of monetary policy since 2020 and the end of its most pointed inflation-busting campaign since the 1980s. Inflation had begun to run hot in 2021 post-COVID due to a confluence of factors such as supply chain disruptions, labor shortages, and stimulus spending. While CPI (inflation) readings have been supportive lately, employment measures have prompted some concern. Going forward, the markets will debate whether this rate cut (and more potential ones in 2024 and 2025) is perfect timing to support the economy or a bit too late for a macro that has already cooled too much.
Luckily, online retail stocks have performed well with share prices up 20.7% on average since the latest earnings results.
Revolve (NYSE:RVLV)
Launched in 2003 by software engineers Michael Mente and Mike Karanikolas, Revolve Group (NASDAQ: RVLV) is a next generation fashion retailer that leverages social media and a community of fashion influencers to drive its merchandising strategy.
Revolve reported revenues of $282.5 million, up 3.2% year on year. This print exceeded analysts’ expectations by 1.9%. Despite the top-line beat, it was still a mixed quarter for the company with a decent beat of analysts’ buyer estimates but slow revenue growth.
"I'm thrilled with our team's performance that fueled a strong second quarter, highlighted by a return to top-line growth and a more than doubling of our net income year-over-year," said co-founder and co-CEO Mike Karanikolas.
Revolve Total Revenue
Interestingly, the stock is up 38.9% since reporting and currently trades at $24.41.
Known for its glass tower car vending machines, Carvana (NYSE:CVNA) provides a convenient automotive shopping experience by offering an online platform for buying and selling used cars.
Carvana reported revenues of $3.41 billion, up 14.9% year on year, outperforming analysts’ expectations by 4.6%. The business had a strong quarter, with adjusted operating income and EPS exceeding expectations.
Carvana Total Revenue
Carvana pulled off the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 43.2% since reporting. It currently trades at $190.90.
Launched in 2002 by founder Niraj Shah, Wayfair (NYSE: W) is a leading online retailer for mass market home goods in the US, UK, Canada, and Germany.
Wayfair reported revenues of $3.12 billion, down 1.7% year on year, falling short of analysts’ expectations by 2%. It was a disappointing quarter as it posted a miss of analysts’ buyer estimates and slow revenue growth.
Wayfair delivered the weakest performance against analyst estimates and slowest revenue growth in the group. The company reported 22 million active buyers, up 0.9% year on year. Interestingly, the stock is up 4.5% since the results and currently trades at $56.89.
Founded by Jeff Bezos after quitting his stock-picking job at D.E. Shaw, Amazon (NASDAQ:AMZN) is the world’s largest online retailer and provider of cloud computing services.
Amazon reported revenues of $148 billion, up 10.1% year on year. This number was in line with analysts’ expectations. Taking a step back, it was a mixed quarter as it also recorded an impressive beat of analysts’ earnings estimates but operating income guidance for next quarter missing analysts’ expectations.
The stock is flat since reporting and currently trades at $182.63.
Founded by Ryan Cohen who later became known for his involvement in GameStop, Chewy (NYSE: CHWY) is an online retailer specializing in pet food, supplies, and healthcare services.
Chewy reported revenues of $2.86 billion, up 2.6% year on year. This result was in line with analysts’ expectations. Taking a step back, it was a weaker quarter as it recorded slow revenue growth.
The stock is up 13.6% since reporting and currently trades at $29.33.
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