As the Q1 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the online retail industry, including Wayfair (NYSE:W) and its peers.
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 Q1. As a group, revenues beat analysts’ consensus estimates by 1% while next quarter’s revenue guidance was in line.
In light of this news, share prices of the companies have held steady as they are up 3.2% on average since the latest earnings results.
Slowest Q1: Wayfair (NYSE:W)
Founded in 2002 by Niraj Shah, Wayfair (NYSE:W) is a leading online retailer of mass-market home goods in the US, UK, Canada, and Germany.
Wayfair reported revenues of $2.73 billion, flat year on year. This print exceeded analysts’ expectations by 0.7%. Despite the top-line beat, it was still a mixed quarter for the company with an impressive beat of analysts’ EBITDA estimates but a decline in its buyers.
"Despite persistent category volatility which marked a fourth consecutive year beginning with contraction, we were able to once again outperform our peers and take healthy market share while driving meaningful improvements in profitability. Year-over-year growth excluding the impact of Germany came in nicely positive - driven by the US business up 1.6% against a category that we estimate declined over the same time frame. Tariffs are clearly top of mind for everyone - while there's a lot of uncertainty in the broader economy, we have direct line of sight and strong conviction on what we need to do for both our customers and our suppliers," said Niraj Shah, CEO, co-founder and co-chairman, Wayfair.
Wayfair Total Revenue
Wayfair delivered the slowest revenue growth of the whole group. The company reported 21.1 million active buyers, down 5.4% year on year. Interestingly, the stock is up 8.3% since reporting and currently trades at $32.71.
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 $4.23 billion, up 38.3% year on year, outperforming analysts’ expectations by 6.2%. The business had an exceptional quarter with a solid beat of analysts’ EBITDA estimates and impressive growth in its units.
Carvana Total Revenue
Carvana scored the biggest analyst estimates beat and fastest revenue growth among its peers. The company reported 133,898 units sold, up 45.7% year on year. The market seems content with the results as the stock is up 3.9% since reporting. It currently trades at $268.80.
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 $155.7 billion, up 8.6% year on year, in line with analysts’ expectations. It was a mixed quarter as it posted a solid beat of analysts’ EPS estimates but operating income guidance for next quarter missing analysts’ expectations.
Interestingly, the stock is up 1.8% since the results and currently trades at $193.20.
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 $296.7 million, up 9.7% year on year. This print met analysts’ expectations. Overall, it was a strong quarter as it also put up a solid beat of analysts’ EBITDA estimates and a narrow beat of analysts’ number of active customers estimates.
The company reported 2.7 million active buyers, up 6% year on year. The stock is down 6.6% since reporting and currently trades at $17.70.
Founded in 2010 by Harvard Business School student Bom Kim, Coupang (NYSE:CPNG) is an e-commerce giant often referred to as the "Amazon of South Korea".
Coupang reported revenues of $7.91 billion, up 11.2% year on year. This number missed analysts’ expectations by 1.9%. All in all, it was a mixed quarter for the company.
Coupang had the weakest performance against analyst estimates among its peers. The company reported 23.6 million active buyers, up 8.8% year on year. The stock is up 8.4% since reporting and currently trades at $26.
Thanks to the Fed’s series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% in November), and a notable surge followed Donald Trump’s presidential election win in November, propelling indices to historic highs. Nonetheless, the outlook for 2025 remains clouded by potential trade policy changes and corporate tax discussions, which could impact business confidence and growth. The path forward holds both optimism and caution as new policies take shape.
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