What a day it’s been for e-commerce stocks across the board. Most major players in this sector have surged today as bond yields decline. Investors appear to be pricing in a slowing of rate hikes, given the Bank of Australia’s slower-than-expected move overnight.
Aside from this macro news, however, there’s another catalyst investors are watching. Yesterday’s announcement from South Korean company Naver that it will buy American e-commerce company Poshmark (NASDAQ:POSH) for $1.2 billion has brought new bullish sentiment to this sector.
This deal, which values POSH stock at $17.90 per share, has been almost fully priced in by the market. Right now, POSH stock is up 13% on this news, though a few percentage points could come to investors looking to buy this stock at these levels. In any case, this all-cash deal is one investors will likely want to watch as it proceeds to completion.
Why Are E-Commerce Stocks Soaring Today?
Of course, given the higher interest rate environment we’ve seen, some sort of slowing of interest rate hikes should be bullish for riskier assets. Accordingly, today’s price action makes sense in the broader landscape.
That said, increased mergers and acquisitions interest in this sector also positively impacts valuations. As more consolidation takes place, investors can get an idea of where companies value their peers. Such valuations generally bleed through to all companies as interest grows in the broader investing community.
This deal appears to make sense, given its niche nature and relatively small price tag — at least, relative to the other major e-commerce players out there. Lower valuations across the board may start looking more attractive for companies looking for M&A opportunities. Accordingly, for investors looking for beaten-down stocks, now may be the time to go shopping as well.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.