E-commerce stocks take a drubbing
August 24, 2015 04:25 PM
It’s been a rough week for global stock markets, and U.S. e-commerce stocks were among the hardest hit.
As of midday Monday, 28 online retail stocks tracked by Internet Retailer had fallen approximately 11.1% since the market opened Aug. 17. That’s far greater than broader declines in U.S. markets during the same period, as the Dow Industrial Average fell 7.2%, and the Nasdaq dropped 7.7% during that same period.
Partly dragging down the total value of the stocks are the eight e-commerce technology service providers and online marketplace operators tracked, as their shares performed especially poorly over the last week. The stock prices of Alibaba Group Holding Ltd., Bazaaarvoice Inc., ChannelAdvisor Corp., Demandware Inc., eBay Inc., Shopify Inc., LivePerson Inc. and PFSweb Inc. collectively fell around 13.5%.
On their own, the 21 e-retailer stocks dropped 10.2% over the past week. Netflix Inc. dropped more than 18% to about $100, while Amazon.com Inc. was down only 1.7% for the period, as of mid-day..
The Dow, after plummeting an historic 1,089 points within minutes of opening Monday, closed at 15,871.28, down 588.47 or 3.6%, Monday. The tech-heavy Nasdaq fell 179.79 points, down 3.8% to 4526.25. The Standard & Poor’s 500 Index closed down 77.68 points, or 3.9%, to 1893.21. More than 13.9 billion shares were traded Monday on U.S. markets, the largest volume since the “flash crash” on Aug. 10, 2011. Chinese shares tumbled the most since 2007.
Online retail stocks were hit especially hard in the past week because they tend to be more volatile during market shifts, according to Tom Forte, a senior analyst at Brean Capital, LLC. “Etsy and Groupon are going to decline more than Burberry and Nordstrom because generally speaking, they move up or down at a more rapid pace than other stocks and the larger market as a whole. There hasn’t been really any safe haven within the e-commerce space.”
The declines come as U.S. stocks in the last week have joined selloffs in Europe and Asia, with the Standard & Poor’s 500 Index tumbling into its first correction in almost four years. A correction is a decline of at least 10% off a peak. Chinese shares sank the most since 2007 and stocks in Germany headed for a bear market. Commodities fell to a 16-year low as crude oil plunged 4.1%. The yen strengthened and 10-year Treasury yields slid below 2% for the first time since April.
“There is no doubt that the panic begets panic in this market,” Michael Holland, chairman at Holland & Co., said in a Bloomberg Television interview. “Yet you called Black Friday, we certainly have Black Monday morning starting for us, so it’s a psychological thing. It’s pervasive. It’s everywhere.”
Alibaba Group, China’s dominant e-commerce company, fell 4.7% to $65 Monday morning in New York, dropping below its September IPO price of $68 amid a rout in global markets. The company’s shares surged to a closing high of $119.15 in November with investors eager to reach Alibaba’s more than 300 million customers. Since then, the company’s market value has plunged more than $120 billion as investors exited the stock on news of a weakening Chinese economy, increased competition from rival JD.com and government reports that Alibaba wasn’t doing enough to fight sales of counterfeit goods on its site.
Chairman Jack Ma’s pledge to diversify the company’s revenue streams hasn’t reversed investor concerns. Alibaba, which derives the vast bulk of its revenue from its own online shopping malls in China, has expanded into Russia, Brazil and India, and earlier this month and invested $4.6 billion in electronics retailer Suning Commerce Group Co.
Included among Internet Retailer’s tracking of online retail stocks are 1-800-Flowers.com Inc., Amazon.com Inc., Blue Nile Inc., CafePress Inc., Chegg Inc., Groupon Inc., Liberty Interactive Corp., Netflix Inc., Nutrisystem Inc., Overstock.com Inc., PC Connection Inc. Petmed Express Inc., Shutterfly Inc., U.S. Auto Parts Network Inc., Evine Live Inc., Cimpress NV, Zulily Inc., Wayfair Inc., FTD Companies Inc. and Etsy Inc.
Bloomberg News contributed to this report.