E-commerce companies have struggled mightily coming out of the Covid-19 pandemic. After skyrocketing in 2020 and 2021 as people the world over were forced to shop exclusively online, e-commerce stocks came crashing back to earth over the last two years as interest rates rose and people returned to in-store shopping. Consequently, the Dow Jones Internet Commerce index is down 18% over the last three years. However, there are reasons to remain bullish on e-commerce. Revenue generated in the global e-commerce space is forecast to reach $3.64 trillion this year and grow to $5.56 trillion by 2027, according to market research firm Statista. The market is huge and continues to grow at a fast clip. There are also many companies that have outsized positions in the sector and dominate, making them potentially strong long-term investments. With the trend towards online shopping here to stay, we offer Q4 stock predictions: Three e-commerce stocks ready to roar into 2024.
Wayfair (NYSE:W) sells furniture and home goods exclusively online. Its stock has been a big outperformer in 2023, having gained 74% year-to-date. The growth this year came from a rebound following a steep selloff in 2022. Even though it has rallied strongly this year, W stock is still down 84% from the peak it reached in 2021 during the height of the pandemic rally. Wayfair’s share price has also slumped 21% in the last month amid concerns about a slowing economy and a decline in the housing market, in particular.
However, W stock looks cheap right now and there are many reasons to recommend it. First, the company continues to expand into new, untapped markets including Canada, Germany and Ireland. Second, Wayfair has a big opportunity in the business-to-business segment, currently representing only 10% of its sales. However, it has a total addressable market in the U.S. and Europe of $200 billion. Third, Wayfair continues to score high in customer satisfaction, offering 40 million products with faster delivery and less product damage than its competitors.
There’s a solid buy-the-dip opportunity in Amazon (NASDAQ:AMZN) stock right now. The world’s leading e-commerce company saw its share price fall nearly 10% in the last month. Much of the decline came since the U.S. Federal Trade Commission (FTC) and multiple states filed a long-awaited antitrust lawsuit against Amazon, alleging the company has an illegal online monopoly. While an antitrust case is a bummer, there are many good things happening at Amazon right now that make the stock worth considering.
First, Amazon announced plans to place advertisements on its Prime Video streaming service starting next year. In fact, it will charge all Prime subscribers an additional fee of $2.99 per month to avoid seeing any ads on the platform. Also, Amazon continues to push further into the red-hot area of generative artificial intelligence (AI), recently announcing it is investing $4 billion in start-up company Anthropic, a main rival to ChatGPT creator OpenAI. These moves show that Amazon is not taking anything for granted.
AMZN stock is still up 45% year to date.
Speaking of Amazon, Shopify (NYSE:SHOP) struck a deal with the e-commerce juggernaut. Going forward, Shopify will offer Amazon’s “Buy with Prime” program to merchants that it helps run their businesses online. In the coming months, Shopify merchants can access Amazon’s “Buy with Prime” service, enabling them to add the Prime logo and offer Amazon’s quick delivery options on their digital storefronts.
Amazon first launched the program in April 2022. Analysts say the program could eventually generate as much as $3.5 billion in annual revenue for Amazon. Shopify initially expressed frustration with “Buy with Prime,” warning its merchants against using the service for fear it would capture revenue that it generates from processing online payments. However, under the terms of the deal with Amazon, Shopify customers who use “Buy with Prime” will use Shopify’s checkout service, and the company will process the transactions on its payment platform.
The additional option is viewed as a category differentiator for Shopify and has helped to move its share price in a positive direction. SHOP stock has risen 44% in 2023.
On the date of publication, Joel Baglole did not hold (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.