The COVID-19 pandemic proved to be a blessing in disguise for internet retail companies as people shopped heavily online amid lockdowns and social distancing mandates. Online retailers have become consumers’ preferred method of shopping due to its convenience, heavy discounts, and easy credit availability.
Furthermore, the COVID-19 omicron variant has rekindled strong e-commerce sales versus in-store sales, as brick and mortar shops suffer lower foot traffic. The largest global retailer, Walmart Inc. (WMT), reported that its online sales increased 69% during fiscal 2021. And according to an Insider Intelligence forecast, U.S. retail e-commerce sales are expected to grow 16.1% to $1.06 trillion in 2022.
Given this backdrop, Wall Street analysts expect popular internet retail stocks Farfetch Limited (FTCH) and ContextLogic Inc. (WISH) to soar more than 80% in price in the near term.
Farfetch Limited (FTCH)
FTCH is a technology platform for the global fashion industry that is headquartered in London. The company’s segments include digital platform, brand platform, and in-store. Its digital platform segment includes Farfetch Marketplace, BrownsFashions.com, and others. The Brand Platform segment consists of brands owned and licensed by New Guards and includes franchised store operations, while the in-store segment covers the activities of stores it operates, such as Browns, Stadium Goods, and others.
On Dec.9, 2021, FTCH announced that it had acquired LUXCLUSIF, a resale platform. The acquisition will enable FTCH to accelerate its resale capabilities by developing key technologies and service features.
FTCH’s revenue increased 33% year-over-year to $582.56 million. The company’s adjusted EBITDA came in at $5.31 million, compared to a $10.31 million adjusted EBITDA loss in the year-ago period. Its group Gross Merchandise Value (GMV) increased 28% year-over-year to $1.01 billion.
Analysts expect FTCH’s EPS and revenue for its fiscal 2021 to increase 108.9% and 35.4%, respectively, year-over-year to $0.87 and $2.27 billion. It surpassed the Street’s EPS estimates in three of the trailing four quarters. Over the past month, the stock has declined 8.4% to close yesterday’s trading session at $27.20. However, Wall Street analysts expect the stock to hit $50.96 in the near term, indicating a potential 87.3% upside.
ContextLogic Inc. (WISH)
San Francisco-based WISH is a mobile electronic commerce company that provides a discovery-based shopping platform that connects merchants’ products to users based on user preferences. The company provides merchants with a suite of services, including demand generation and engagement, user-generated content creation, data intelligence, and business operations support.
On Nov. 9, 2021, WISH announced its decision to improve product quality on its platform by introducing the Wish Standards program to improve user trust and increase customer retention. The program seeks to incentivize quality products and the positive behaviors of its merchants.
WISH’s revenues for nine months ended Sept. 30, 2021, increased 3% year-over-year to $1.79 billion. The company’s logistics revenue for the nine months ended Sept. 30, 2021, increased 101% year-over-year to $621 million. Also, its operating expenses came in at $230 million, compared to $443 million in the year-ago period.
For the quarter ending Dec. 31, 2021, WISH’s EPS is expected to increase 97% year-over-year to $0.09. The stock has declined 20.7% in price over the past month to close yesterday’s trading session at $2.53. However, Wall Street analysts expect the stock to hit $4.70 in the near term, indicating a potential 85.7% upside.
FTCH shares were trading at $25.43 per share on Tuesday afternoon, down $1.77 (-6.51%). Year-to-date, FTCH has declined -23.93%, versus a -3.79% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.
2 Internet Retail Stocks Wall Street Predicts Will Rally More Than 80% StockNews.com
