In This Article:
E-commerce platforms eBay (EBAY), Etsy (ETSY), and Wayfair (W) released their latest earnings results, giving an inside look into how consumers are spending amid inflation woes.
Citi Analyst Ygal Arounian joins Wealth! to give insight into the state of e-commerce, what it signals about consumer spending trends, and who could be considered the "winner" of this group of names.
Arounian relates back to Etsy to discuss the position consumers find themselves in: "Etsy sits really in the most challenged part of the consumer spending environment right now, which is... consumer discretionary goods rather. So people are seem to still be spending on travel. People are spending on essentials because they need to. And where you're getting the biggest cut from the wallet is on goods that you don't necessarily need."
For more expert insight and the latest market action, click here to watch this full episode of Wealth!
This post was written by Nicholas Jacobino
Three major e-commerce companies, eBay, Etsy, and Wayfair, all reporting quarterly earnings over the last 24 hours. The mixed results offering a better look into current consumer spending habits and some potential headwinds. For more, let's bring in Egal Arounian who's the City analyst here. Egal, great to have you on the show with us. So let's start perhaps with the brightest of them all, who stood out in this batch of earnings?
Well, just showed on your screen there. eBay's the the one of the three that that's up today. Um, you know, they're they're doing a little bit better in this environment. Uh part of part of why they're doing better is because eBay does benefit from a a trade down impact where where you see some of the softness in in the consumer spending environment. Uh people rather than buying uh new new products, they might buy refurbished ones. So so they benefit a little bit from there. But some of the investments that they made into their platform are also what's driving um some of the the better performance there. Uh although I think it's fair to note that across all three trends are certainly challenged um due to the macro.
And so with that in mind, where does that put Etsy within this? Because I mean, I was I was just on eBay actually earlier this morning to your point, and because I was trying to trade down on something. But that means that I'm not going to perhaps some of the handmade goods or some of the merchants that are on Etsy.
Yeah, Etsy sits really in the most challenged part of of the consumer spending environment right now, which is consumer non-discretionary goods, uh, or or consumer discretionary goods, uh, rather, sorry. So, you know, people are seem to still be spending on travel, um, people are spending on essentials because they need to, and where you're getting the the biggest cut from the wallet is is on goods that you don't necessarily need. Now, uh, Etsy certainly has a very clear, um, consumer value proposition around those handmade products, unique products, and they're really trying to dial into that and focus there. But the the part of the consumer macro that they play in is just has been the most challenged part and it continues to be that way.
We got one more here as well, Wayfair. Uh of course, we were looking through those earnings earlier here on the day. We just had the stock reaction for our folks here, and there it is on the screen, just like that, right on demand. All right, it's down 3.8%. I mean, this has been challenged as well, especially because you don't have as many people that are moving or need to refurbish or refurnish, I should say, a home. So Wayfair naturally gets challenged.
Yeah, uh speaking of soft pockets within the consumer environment, the home furnishing category has been uh one of the most challenges as well. Uh on the earnings call today, the CEO talked about how how the peak to trough within home furnishings, uh is is as worse as it's ever been and as bad as it's been since the uh great financial crisis. So that that speaks to what we're seeing in the home furnishing category. Uh you're absolutely right. People aren't moving. We saw existing home sales last week that were at 3.8 million on an annualized basis. That's pretty much at record lows. Uh new home sales are you know, at at those types of levels as well. With people not moving, um you know, there is just less of a need to buy furniture and with pressure on the wallet, you know, that's certainly category that um gets pushed to the back of most people's minds. Um so we're still waiting for improvement in that category. Wayfair has done a lot to take out a lot of their costs and do what they can in this environment. Um things haven't gotten materially worse, which is the one bright spot. If you look across all all three of these guys, um but they really haven't gotten much better and we've been in this holding pattern for a while.
