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12 Best Small Cap Ecommerce Stocks to Buy

In this article, we discuss 12 best small cap ecommerce stocks to buy. If you want to read about some more small cap ecommerce stocks, go directly to 5 Best Small Cap Ecommerce Stocks to Buy.

The global ecommerce sector is dominated by big names such as Amazon.com, Inc. (NASDAQ:AMZN), Alibaba Group Holding Limited (NYSE:BABA), and PayPal Holdings, Inc. (NASDAQ:PYPL). Despite these brands dominating the space, there are several lesser known companies in the industry that offer the same bang for the buck. As global ecommerce sales remain on track to reach 27% of retail sales by 2026, despite macro headwinds and recession fears, investors should take notice of these small cap growth stocks. 

A recent report by investment bank Morgan Stanley reveals that even in countries where online shopping is already popular, ecommerce will continue to gain further market share. For example, in parts of Southeast Asia and Latin America, ecommerce could grow 17% and 20%, respectively, over the next five years and compound annually. In South Korea, the sector could grow an astonishing 45% in the next five years, driven by food delivery and same-day options, as well as other innovations. 

Even in the United States, ecommerce could reach 31% of sales by 2026, up from 23% now, as brick-and-mortar stores close and consumers prioritize convenience. Andrew Ruben, an analyst covering retail and ecommerce in Latin America, believes that digital sales are growing across new verticals such as beauty, apparel, and grocery. He has said that even though there are headwinds in certain countries and verticals, there was a strong belief in the industry that these barriers will continue to come down. 

Our Methodology

The companies that operate in the ecommerce sector and have market capitalizations between $200 million and $2 billion were selected for the list. The analyst ratings of these firms and the latest updates related to them are also discussed to provide some additional context. Data from around 900 elite hedge funds tracked by Insider Monkey in the second quarter of 2022 was used to identify the number of hedge funds that hold stakes in each firm.

Denys Prykhodov / Shutterstock.com

Best Small Cap Ecommerce Stocks to Buy

12. Newegg Commerce, Inc. (NASDAQ:NEGG)

Number of Hedge Fund Holders: 3     

Newegg Commerce, Inc. (NASDAQ:NEGG) operates as an electronics-focused e-retailer in North America. It is one of the best ecommerce stocks to invest in. On October 7, Newegg Commerce revealed the launch of the Newegg Creator. It is the first formal influencer program of Newegg. Newegg Creator will focus on influencer and content creators’ passion about video games, tech, and lifestyle brands. 

At the end of the second quarter of 2022, 3 hedge funds in the database of Insider Monkey held stakes worth $198,000 in Newegg Commerce, Inc. (NASDAQ:NEGG), compared to 3 in the previous quarter worth $417,000.

Just like Amazon.com, Inc. (NASDAQ:AMZN), Alibaba Group Holding Limited (NYSE:BABA), and PayPal Holdings, Inc. (NASDAQ:PYPL), Newegg Commerce, Inc. (NASDAQ:NEGG) is one of the best ecommerce stocks to buy according to elite investors. 

11. Liquidity Services, Inc. (NASDAQ:LQDT)

Number of Hedge Fund Holders: 12    

Liquidity Services, Inc. (NASDAQ:LQDT) provides e-commerce marketplaces, self-directed auction listing tools, and value-added services. It is one of the top ecommerce stocks to invest in. On October 19, Zero Hash, a subsidiary of Liquidity Services, announced that it has collaborated with Current, a leading US financial technology platform, to provide access to its 4 million members for no fee crypto trading.

At the end of the second quarter of 2022, 12 hedge funds in the database of Insider Monkey held stakes worth $46 million in Liquidity Services, Inc. (NASDAQ:LQDT), compared to 9 in the previous quarter worth $56.4 million.

10. ChannelAdvisor Corporation (NYSE:ECOM)

Number of Hedge Fund Holders: 13   

ChannelAdvisor Corporation (NYSE:ECOM) provides software-as-a-service (SaaS) solutions in the United States and internationally. It is one of the premier ecommerce stocks to invest in. On September 6, CommerceHub stated that it has made a definitive agreement to acquire shares of ChannelAdvisor Corporation for $23.10 per share. The transaction was led by the global investor and current shareholder of CommerceHub, Insight Partners.

On September 7, investment advisory Baird maintained a Neutral rating on ChannelAdvisor Corporation (NYSE:ECOM) stock and raised the price target to $23 from $17. Analyst Colin Sebastian issued the ratings update. 

Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Driehaus Capital is a leading shareholder in ChannelAdvisor Corporation (NYSE:ECOM), with 594,049 shares worth more than $8.7 million. 

In its Q2 2022 investor letter, Diamond Hill Capital Management, an asset management firm, highlighted a few stocks and ChannelAdvisor Corporation (NYSE:ECOM) was one of them. Here is what the fund said:

“ChannelAdvisor Corporation (NYSE:ECOM) sells cloud-based software to the retail sector to manage online marketplace listings and support other e-commerce functions. The company has been successful in moving upmarket to target larger customers. Based on the notable discount ChannelAdvisor trades at relative to comparable software M&A transactions in recent years, we believe the market continues to undervalue its long-term fundamentals.”

9. ContextLogic Inc. (NASDAQ:WISH)

Number of Hedge Fund Holders: 13  

ContextLogic Inc. (NASDAQ:WISH) operates as a mobile ecommerce company in Europe, North America, South America, and internationally. It is one of the elite ecommerce stocks to invest in. On October 17, ContextLogic announced the launch of the second phase of its global integrated brand marketing with new Forced Smiles creative ad campaign to support its rebrand. Forced Smile was developed in a partnership with ad agency Whale.

Among the hedge funds being tracked by Insider Monkey, Toronto-based investment firm Maple Rock Capital is a leading shareholder in ContextLogic Inc. (NASDAQ:WISH), with 13.5 million shares worth more than $21.6 million. 

8. Poshmark, Inc. (NASDAQ:POSH)

Number of Hedge Fund Holders: 15     

Poshmark, Inc. (NASDAQ:POSH) operates as a social marketplace for new and second-hand style products in the United States, Canada, India, and Australia. It is one of the major ecommerce stocks to invest in. On October 4, Naver, a South Korean online platform, said that it will acquire all issued and outstanding shares of Poshmark for $17.90 in cash with an enterprise value of approximately $1.2 billion. 

On August 15, Barclays analyst Trevor Young upgraded Poshmark, Inc. (NASDAQ:POSH) stock to Overweight from Equal Weight with a price target of $17, up from $13, noting that the company was navigating ad-targeting post IDFA and continues to ramp as a percentage of revenue.

At the end of the second quarter of 2022, 15 hedge funds in the database of Insider Monkey held stakes worth $78 million in Poshmark, Inc. (NASDAQ:POSH), compared to 23 the preceding quarter worth $82.6 million.

In its Q2 2022 investor letter, MPE Capital, an asset management firm, highlighted a few stocks and Poshmark, Inc. (NASDAQ:POSH) was one of them. Here is what the fund said:

“Two (very) costly mistakes I’ve made over the last twelve months have been my investments in Altice USA and Poshmark, Inc. (NASDAQ:POSH). Both are down over 50% from my initial purchase price. I not only poorly appraised business quality; I also incorrectly appraised the intrinsic value of both of these companies. It should rarely end up the case that we pay over intrinsic value, at worst case we should never lose money on an investment.

One serious risk is the huge amount of leverage and the possibility of prolonged inflation leading to higher rates. They don’t have any major debt maturities coming due for a few years, but it’s possible that rates are much higher then and they have issues refinancing at favorable terms or at all. I’ve always detested companies with too much leverage not sure why I didn’t consider this enough upon my initial analysis. I guess I figured it’s a stable business that can handle some leverage. However, a business with a lot of leverage will always be at the mercy of capital markets, a fact I can’t ever feel very comfortable with.

In summary, I overstated steady state free cash flows, poorly appraised their value proposition versus peers, didn’t consider new entrants and technologies thoroughly enough, and I didn’t consider the risk of rising inflation and rates. I think once they fiberize their footprint and if they can bring their leverage down, and it’s clear that new entrants aren’t having much effect on their business, Altice might only then be a decent investment candidate.”

7. BARK, Inc. (NYSE:BARK)

Number of Hedge Fund Holders: 16  

BARK, Inc. (NYSE:BARK) is a dog-centric company that provides products, services, and content for dogs. It is one of the major ecommerce stocks to invest in. On October 18, Bark revealed the expansion of its breed specific food offering to include seven dog breeds. In addition, the company is launching food tailored to puppies to ensure the healthy growth of dogs from a young age.

At the end of the second quarter of 2022, 16 hedge funds in the database of Insider Monkey held stakes worth $12 million in BARK, Inc. (NYSE:BARK), compared to 20 the preceding quarter worth $15.8 million.

6. BigCommerce Holdings, Inc. (NASDAQ:BIGC)

Number of Hedge Fund Holders: 17  

BigCommerce Holdings, Inc. (NASDAQ:BIGC) operates a software-as-a-service platform for small businesses, mid-markets, and large enterprises internationally. It is one of the best ecommerce stocks to invest in. On September 15, BigCommerce announced its partnership with CoinPayments and BitPay which will offer crypto currency payments for its merchants in some countries. This digital currency supports over 100 crypto wallets. Merchants will accept tokens such as dogecoin, ethereum, bitcoin cash, and shiba etc. 

On October 18, Barclays analyst Raimo Lenschow maintained an Equal Weight rating on BigCommerce Holdings, Inc. (NASDAQ:BIGC) stock and lowered the price target to $18 from $20, noting that the current uncertain outlook favors cash flow positive, established software vendors.

At the end of the second quarter of 2022, 17 hedge funds in the database of Insider Monkey held stakes worth $302.9 million in BigCommerce Holdings, Inc. (NASDAQ:BIGC), compared to 28 in the previous quarter worth $344.8 million.

Along with Amazon.com, Inc. (NASDAQ:AMZN), Alibaba Group Holding Limited (NYSE:BABA), and PayPal Holdings, Inc. (NASDAQ:PYPL), BigCommerce Holdings, Inc. (NASDAQ:BIGC) is one of the best ecommerce stocks to buy according to elite investors. 

In its Q2 2022 investor letter, Polen Capital, an asset management firm, highlighted a few stocks and BigCommerce Holdings, Inc. (NASDAQ:BIGC) was one of them. Here is what the fund said:

“Finally, we sold BigCommerce Holdings, Inc. (NASDAQ:BIGC) due to clear Flywheel violations. We are concerned about the company’s deteriorating profitability and reliance on external sources of capital. BigCommerce is facing numerous challenges including developer resources in Ukraine and the potential for staffing challenges in a still challenging labour market for engineers.”

Click to continue reading and see 5 Best Small Cap Ecommerce Stocks to Buy.

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Disclosure. None. 12 Best Small Cap Ecommerce Stocks to Buy is originally published on Insider Monkey.

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