Since the onset of the COVID-19 pandemic, e-commerce has been on a tear. Lockdowns, a move to remote work and other impacts of COVID pushed a great number of global citizens to spend more of their money online through e-commerce sites and on-demand services.
For companies like Shopify, the period since March 2020 has proven a bonanza. The Canadian e-commerce giant spent last March bouncing between $350 and $420 per share. Today, the company is worth $1,554.74 per share.
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Other players saw their businesses scale as consumers spent more time buying online and less time in stores. Instacart’s grocery delivery business accelerated. DoorDash went public on the back of a demand surge. Roblox usage skyrocketed, sending it to the public markets on a high. The list goes on.
But while some sectors did well, and many have continued to wow investors, the investor-thrilling run that e-commerce companies, in particular, has been on for five quarters could be slowing.
Black Friday and earnings warnings
While I despise astroturfed holidays that revolve around shopping, they can provide useful data points. You will not be shocked that Black Friday was a bit of a bust in terms of U.S. retail foot traffic. New COVID variants will do that, frankly.
But it may surprise you that online shopping as part of the Black Friday fauxliday fell compared to 2020 levels. Not that the declines were severe, but seeing online spending drift to $8.9 billion this year from $9.0 billion last year made me sit up and take note.
Perhaps we should not have been surprised. There were warning signs.
Shopify’s Q3 earnings, reported October 28, 2021, were a letdown. The company’s posted revenues of $1.12 billion missed estimates, despite posting 46% year-over-year growth. Earnings per share and gross merchandise volume also missed analyst guesses.