Why Wayfair (W) Shares Are Plunging Today

The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how Carvana and the rest of the online retail stocks fared in Q3.

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 5 online retail stocks we track reported a strong Q3. As a group, revenues beat analysts’ consensus estimates by 3.5% while next quarter’s revenue guidance was 0.9% below.

Thankfully, share prices of the companies have been resilient as they are up 9% on average since the latest earnings results.

Best Q3: Carvana

Known for its glass tower car vending machines, Carvana provides a convenient automotive shopping experience by offering an online platform for buying and selling used cars.

Carvana reported revenues of $5.65 billion, up 54.5% year on year. This print exceeded analysts’ expectations by 11.1%. Overall, it was an exceptional quarter for the company with an impressive beat of analysts’ revenue estimates.

Carvana scored the biggest analyst estimates beat and fastest revenue growth of the whole group. The company reported 155,941 units sold, up 43.5% year on year. Unsurprisingly, the stock is up 8.1% since reporting and currently trades at $382.82.

We think Carvana is a good business, but is it a buy today? Read our full report here, it’s free for active Edge members.

Coupang

Founded in 2010 by Harvard Business School student Bom Kim, Coupang is an e-commerce giant often referred to as the "Amazon of South Korea".

Coupang reported revenues of $9.27 billion, up 17.8% year on year, outperforming analysts’ expectations by 2.7%. The business had a very strong quarter with a solid beat of analysts’ EBITDA estimates and a decent beat of analysts’ revenue estimates.

Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 16.9% since reporting. It currently trades at $26.72.

Is now the time to buy Coupang? Access our full analysis of the earnings results here, it’s free for active Edge members.

Slowest Q3: Revolve

Launched in 2003 by software engineers Michael Mente and Mike Karanikolas, Revolve (NASDAQ:RVLV) is a fashion retailer leveraging social media and a community of fashion influencers to drive its merchandising strategy.

Revolve reported revenues of $295.6 million, up 4.4% year on year, falling short of analysts’ expectations by 0.8%. It was a slower quarter as it posted a slight miss of analysts’ revenue estimates and a slight miss of analysts’ number of active customers estimates.

Revolve delivered the weakest performance against analyst estimates and slowest revenue growth in the group. The company reported 2.75 million active buyers, up 4.5% year on year. Interestingly, the stock is up 31.3% since the results and currently trades at $26.23.

Read our full analysis of Revolve’s results here.

Amazon

Founded by Jeff Bezos after quitting his stock-picking job at D.E. Shaw, Amazon is the world’s largest online retailer and provider of cloud computing services.

Amazon reported revenues of $180.2 billion, up 13.4% year on year. This result topped analysts’ expectations by 1.2%. Overall, it was a strong quarter as it also logged an impressive beat of analysts’ EPS estimates and a narrow beat of analysts’ revenue estimates, as Amazon Web Services and North America all beat.

The stock is up 5.1% since reporting and currently trades at $234.50.

Read our full, actionable report on Amazon here, it’s free for active Edge members.

Wayfair

Founded in 2002 by Niraj Shah, Wayfair is a leading online retailer of mass-market home goods in the US, UK, Canada, and Germany.

Wayfair reported revenues of $3.12 billion, up 8.1% year on year. This number beat analysts’ expectations by 3.4%. It was a strong quarter as it also produced a solid beat of analysts’ EBITDA estimates and a decent beat of analysts’ revenue estimates.

The company reported 21.2 million active buyers, down 2.3% year on year. The stock is up 17.6% since reporting and currently trades at $101.70.

Read our full, actionable report on Wayfair here, it’s free for active Edge members.