In this article, we will take a look at the 15 best eCommerce stocks to invest in.
Persistent inflation, lukewarm wage growth and macroeconomic situation forced investors to remain on their toes throughout 2023. As we enter the holiday shopping season, analysts are anxious about how US consumer spending would pan out in the current high inflationary environment. A latest survey by Deloitte paints a positive picture on this front. The company surveyed 4,330 US adults in August and September to find out that on average, the American consumer will spend about $1,652 during the holiday season in 2023, up 14% from last year. The survey showed that American consumers with an average income of $50,000 and $99,999 expect to spend 26% more this year. However, the report did highlight that student loans, a stagnant housing market and lack of real wage growth are some of the factors that will dent the holiday shopping trends this year for certain income groups. More US shoppers will be looking to get bargains and deals this year, according to the Deloitte report. The report said two-thirds of the surveyed consumers said that they will shop during the Thanksgiving week, up from 49% in 2022.
Ecommerce’s share of the total retail market in the world is rising by the day. Latest data released by the Commerce Department said that ecommerce sales jumped 3% in the first quarter from the fourth quarter. Ecommerce sales now account for about 15.1% of retail sales, a record. That the ecommerce market still accounts for just 15.1% of the total retail market speaks volumes about the growth opportunities still present in the industry.
But things for ecommerce companies haven’t been that smooth as they were during the COVID days. Rising competition from China, increasing logistics costs and consumers’ changing preferences are posing challenges. Amazon’s ecommerce sales growth has not be solid in the most recent quarter, as traditional retailers like Walmart begin to offer several ecommerce and pickup options. A latest report by the Wall Street Journal also cited a survey by logistics company Happy Returns which said that ever since it started charging customers for returning their orders, it has seen a decline in the number of customers.
For this article we first listed down all holdings of The Global X E-commerce ETF (EBIZ) and gauged hedge fund sentiment for each stock using Insider Monkey’s database of 910 hedge funds. We then picked 15 stocks with the highest number of hedge fund investors. Therefore, the stocks listed in this article are the best ecommerce stocks to buy according to hedge funds.
Photo by CardMapr.nl on Unsplash
15. Williams-Sonoma, Inc. (NYSE:WSM)
Number of Hedge Fund Holders: 33
Kitchenware and home décor company Williams-Sonoma, Inc. (NYSE:WSM) ranks 15th in our list of the best e-commerce stocks to buy now. As of the end of the second quarter of 2023, 33 hedge funds had stakes in Williams-Sonoma, Inc. (NYSE:WSM). The biggest stakeholder of Williams-Sonoma, Inc. (NYSE:WSM) was Steve Cohen’s Point72 Asset Management which had a $58 million stake in the company.
Williams-Sonoma, Inc. (NYSE:WSM) jumped in September after Green Equity Investors IX boosted its passive stake in the company to 5.0%.
14. Wayfair Inc. (NYSE:W)
Number of Hedge Fund Holders: 37
Wayfair Inc. (NYSE:W) sells furniture and home items online. Wayfair Inc. (NYSE:W) has gained about 20% year to date. As of the end of the second quarter of 2023, Zachary Sternberg and Benjamin Stein’s Spruce House Investment Management was the biggest stakeholder of Wayfair Inc. (NYSE:W) with a $273 million stake.
Earlier this month, Loop Capital upgraded Wayfair Inc. (NYSE:W) to Hold from Sell. However, the firm noted the cost of borrowing has increased in the industry and organic sales trend was declining. Loop also decreased its Wayfair Inc. (NYSE:W) price target by $10 to $50.
Alphyn Capital Management made the following comment about Wayfair Inc. (NYSE:W) in its second quarter 2023 investor letter:
“Wayfair Inc. (NYSE:W) has endured a tough couple of years, resulting in the stock being out of favor with investors, presenting the opportunity to earn premiums from covered call options. I profitably exited calls sold in Q1 and re-initiated a position following the earnings announcement. The market seemed unmoved by Wayfair’s claim of market share gains, given headline revenue declines of 7.3% for the quarter. However, a business update in June, in which the company disclosed rising order volumes, precipitated a stock price rally, forcing me to close out the calls. Longer term, Wayfair’s scaled presence in online furniture, comprehensive product offering, and prior investments in supply chain infrastructure is well-positioned to capitalize on the industry’s increasing shift to online. Assuming management maintains its recent focus on cost control, Wayfair is on track to return to profitability and reach its target margin of 30%.”
13. Etsy, Inc. (NASDAQ:ETSY)
Number of Hedge Fund Holders: 38
Insider Monkey’s database of 910 hedge funds shows that 38 hedge funds had stakes in Etsy, Inc. (NASDAQ:ETSY) as of the end of the second quarter of 2023. Citi downgraded the stock to Neutral amid limited visibility into its 2024 gross merchandise sales growth. Citi also decreased its price target for Etsy, Inc. (NASDAQ:ETSY) to $67 from $114.
In early October, Wedbush’s analyst Seth Basham had also started covering the stock with a Hold rating and a $70 price target. The analyst said he sees long-term value but in the short term he was seeing headwinds for Etsy, Inc. (NASDAQ:ETSY).
ClearBridge Mid Cap Growth Strategy made the following comment about Etsy, Inc. (NASDAQ:ETSY) in its Q2 2023 investor letter:
“Likewise, Etsy, Inc. (NASDAQ:ETSY), another detractor and the leading e-commerce marketplace for handcrafted items, was negatively impacted by a shift in consumer spending from goods to services, elevated year-over-year performance comparables and fear of slowing growth in the second half of 2023 or 2024. Despite these challenges, we believe much of the shift in consumer purchasing has already occurred and investor pessimism over future performance may be overblown.”
12. Tripadvisor, Inc. (NASDAQ:TRIP)
Number of Hedge Fund Holders: 33
Online travel services company Tripadvisor, Inc. (NASDAQ:TRIP) shares have lost about 20% year to date but analysts believe the stock might be undervalued. Goldman Sachs recently started covering Tripadvisor, Inc. (NASDAQ:TRIP) with a Buy rating and a $22 price target. Goldman’s analyst Ben Miller believes Tripadvisor, Inc. (NASDAQ:TRIP)’s declining ads revenue from its metasearch channels is already priced in and he’s bullish on the stock based on profitability upside of the overall business.
Rowan Street Capital made the following comment about Tripadvisor, Inc. (NASDAQ:TRIP) in its second quarter 2023 investor letter:
“Now, the bottom 3 performers from all the companies that we’d sold were Docusign (DOCU) -76%, Tripadvisor, Inc. (NASDAQ:TRIP) -59% and Under Armour (UA) -57%. These represent the losses we would have incurred had we held on to these positions until now. We must note that all 3 of these were sold for purely fundamental reasons and we ended up being correct on all of them.”
11. Trip.com Group Limited (NASDAQ:TCOM)
Number of Hedge Fund Holders: 44
China-based online travel services company Trip.com Group Limited (NASDAQ:TCOM) shares have gained a whopping 50% over the past one year, thanks to rising travel demand all over the world.
As of the end of the second quarter of 2023, 44 hedge funds out of the 910 funds tracked by Insider Monkey had stakes in Trip.com Group Limited (NASDAQ:TCOM). The biggest stakeholder of Trip.com Group Limited (NASDAQ:TCOM) during this period was Richard S. Pzena’s Pzena Investment Management which had a $230 million stake in the company.
Artisan International Value Fund made the following comment about Trip.com Group Limited (NASDAQ:TCOM) in its Q4 2022 investor letter:
“Trip.com Group Limited (NASDAQ:TCOM), a Chinese online travel agency, was the second-largest contributor to return in 2022. Trip.com is the dominant supplier of online travel reservations and is expected to benefit from China’s loosening COVID-19 restrictions on both domestic and international travel. Management of Trip.com has wisely spent the COVID-19 lockdown period reinforcing and improving the company’s market position and reducing unnecessary costs. We expect earnings to boom over the next year as travel picks up. Other investors appeared to agree, pushing the share price up 42% in 2022.”
10. eBay Inc. (NASDAQ:EBAY)
Number of Hedge Fund Holders: 49
Out of the 910 hedge funds in Insider Monkey’s database, 49 hedge funds reported owning stakes in eBay Inc. (NASDAQ:EBAY), up from 44 hedge funds in the previous quarter. The biggest stakeholder of eBay Inc. (NASDAQ:EBAY) during this period was Natixis Global Asset Management’s Harris Associates which had a $201 million stake in the company.
eBay Inc. (NASDAQ:EBAY) in its Q2 earnings call talked about how it plans to integrate AI with its operations:
“I’m excited to announce that this quarter, we’re ramping up a new feature we’ve been calling Magical Listing, which will make it significantly easier for sellers to list their inventory. One of the biggest challenges to operating a listings-based marketplace is the burden on sellers to fill in descriptions and item aspects for their products.
In May, we launched the first version of our Magical Listing experience, which dramatically reduces this friction for our sellers via AI-generated item descriptions. We integrated Azure’s open AI API into our core listing flow. And now sellers can choose to have detailed product information instantly populated by Generative AI based on the product’s title, category and any item aspects that have been input. During the quarter, we ramped this beta feature to more than 50% of iOS and Android users in the U.S. and expect to reach 100% in the coming weeks. Early signals have been extremely positive. Approximately 30% of users have tried the feature at least once, and we’ve observed acceptance rates of over 90% for AI-generated descriptions, including those with edits.
Read the full earnings call transcript here.
Here is what Smead Value Fund has to say about eBay Inc. (NASDAQ:EBAY) in its Q3 2022 investor letter:
“Two things are very noticeable right off the top. First, sometimes you have to be happy losing less in a bear market environment so that you have more of your capital to grow in the next bull market. We are never really happy losing money. Second, 2022 is likely to be our third year of existence as a fund to lose money for the year. This year would join 2008 and 2018 in this undistinguished category. Our biggest detractors was dominated by eBay (NASDAQ:EBAY). Consumer/investor fears about media and e-commerce hit WBD and EBAY and profit taking in Amgen came from early 2022 strength.”
9. Expedia Group Inc. (NASDAQ:EXPE)
Number of Hedge Fund Holders: 57
Expedia Group, Inc. (NASDAQ:EXPE) is one of the stocks to watch in 2023 based on its upcoming AI growth catalysts. Expedia Group, Inc. (NASDAQ:EXPE) shares are up by about 8% over the past one year amid growing travel demand. HSBC recently started covering Expedia Group, Inc. (NASDAQ:EXPE) with a Hold rating.
As of the end of the second quarter of 2023, 57 hedge funds out of the 910 hedge funds tracked by Insider Monkey had stakes in Expedia Group, Inc. (NASDAQ:EXPE). The biggest stakeholder of Expedia Group, Inc. (NASDAQ:EXPE) was Paul Reeder and Edward Shapiro’s PAR Capital Management which had a $372 million stake in the company.
8. Sea Limited (NYSE:SE)
Number of Hedge Fund Holders: 62
Sea Limited (NYSE:SE) has taken a beating this year, tanking 22% in the period through October 27. But some believe Sea Limited (NYSE:SE) is undervalued as it has several revenue streams and a diversified business model, which spans social media, ecommerce, payments and games.
A total of 62 hedge funds tracked by Insider Monkey reported having stakes in Sea Limited (NYSE:SE) The biggest stakeholder of Sea Limited (NYSE:SE) was Nitin Saigal and Dan Jacobs’s Kora Management which owns a $224 million stake in the company.
Artisan Developing World Fund made the following comment about Sea Limited (NYSE:SE) in its Q3 2023 investor letter:
“Bottom contributors to performance for the quarter included Southeast Asian e-commerce and gaming platform company Sea Limited (NYSE:SE). Sea declined after announcing its ambition to pivot back toward growth, causing investors to question its profitability trajectory and competitive position; Sea benefited late in the quarter from favorable regulatory developments in key market Indonesia that may impede competition from TikTok.”
7. JD.com, Inc. (NASDAQ:JD)
Number of Hedge Fund Holders: 64
JD.com, Inc. (NASDAQ:JD) has lost about 55% in value year to date. Analysts recently slapped JD.com, Inc. (NASDAQ:JD) with downgrades amid growth concerns and an overall slowing economic activity in China. However, JD.com, Inc. (NASDAQ:JD) could be a strong long-term pick, especially to profit from the rebound that will come in the country sooner or later.
A total of 64 hedge funds tracked by Insider Monkey had stakes in JD.com, Inc. (NASDAQ:JD) as of the end of the second quarter of 2023. The biggest stakeholder of JD.com, Inc. (NASDAQ:JD) was Chase Coleman and Feroz Dewan’s Tiger Global Management LLC which had a $719 million stake in the company.
Baron Emerging Markets Fund made the following comment about JD.com, Inc. (NASDAQ:JD) in its first quarter 2023 investor letter:
“JD.com, Inc. (NASDAQ:JD) is one of the three largest e-commerce platforms in China. Shares declined after the company reported a slowdown in fourth quarter sales and commented that deliberate culling of unprofitable SKUs would also be a drag on headline revenue growth in the first half of 2023. We believe the slowdown was driven by the peak in Chinese COVID lockdowns, which have since ended, and the elimination or reduction of unprofitable business is better for long-term margins and returns on capital. We remain investors.”
6. PDD Holdings Inc. (NASDAQ:PDD)
Number of Hedge Fund Holders: 67
PDD Holdings Inc. (NASDAQ:PDD), formerly known as Pinduoduo, ranks 6th in our list of the best ecommerce stocks to buy now according to hedge funds. PDD Holdings Inc. (NASDAQ:PDD) is also among the aggressive growth stocks being amassed by hedge funds.
A total of 67 hedge funds in Insider Monkey’s database of 910 funds had stakes in the Chinese ecommerce retail. The most significant stake in PDD Holdings Inc. (NASDAQ:PDD) belongs to Hillhouse Capital Management of Lei Zhang which had a $565 million stake in the company.
5. Shopify Inc. (NYSE:SHOP)
Number of Hedge Fund Holders: 74
Canadian ecommerce giant Shopify Inc. (NYSE:SHOP) ranks 5th in our list of the best ecommerce stocks to buy now. Shopify Inc. (NYSE:SHOP) was moving recently after the company signed a deal with Amazon after which Shopify store owners will be able to give an option to Buy with Amazon Prime in their stores.
A total of 74 hedge funds out of the 910 funds in Insider Monkey’s database had stakes in Shopify Inc. (NYSE:SHOP). The most significant stakeholder of Shopify Inc. (NYSE:SHOP) was Catherine D. Wood’s ARK Investment Management which had a $573 million stake in the company.
RiverPark Large Growth Fund made the following comment about Shopify Inc. (NYSE:SHOP) in its Q2 2023 investor letter:
“Shopify Inc. (NYSE:SHOP): Shopify shares were a top contributor in the quarter following strong 1Q results and the announced divestiture of its logistics business. Gross Merchandise Volume (GMV) grew 15% year over year as e-commerce sales broadly rebounded and Shopify continued to take market share. Revenue grew 25% driven by increased merchant adoption of multiple products, especially Shop Pay. The company generated $86 million of free cash flow, up from a $46 million loss last year, and announced expectations to be free cash flow positive for each quarter for the rest of the year. The company had previously announced several cost savings plans, which are driving margin and free cash flow improvement, and now plans to divest its capital-intensive logistics arm. Faster growing revenue, lower operating expenses, and a less capital-intensive future were all cheered on by the market.
Last year, 10% of US retail e-commerce sales flowed through SHOP, second only to Amazon, and the company is still enjoying significant tailwinds as retail merchants of all sizes adopt SHOP’s software tools to display, manage and sell their products across a dozen different sales channels. We believe that the overall growth of e-commerce, combined with the development of new products and services, such as its digital wallet Shop Pay, should continue to drive revenue growth of more than 20% per year over the next several years, accompanied by re-acceleration of operating margin growth and FCF generation.”
4. MercadoLibre, Inc. (NASDAQ:MELI)
Number of Hedge Fund Holders: 77
Argentina-based ecommerce and online marketplace company MercadoLibre, Inc. (NASDAQ:MELI) ranks 4th in our list of the best ecommerce stocks to buy now according to hedge funds. In August, Wedbush started covering MercadoLibre, Inc. (NASDAQ:MELI) with an Outperform rating and a $1,500 price target.
A total of 77 hedge funds in Insider Monkey’s database of 910 hedge funds had stakes in MercadoLibre, Inc. (NASDAQ:MELI) as of the end of the second quarter of 2023.
Artisan Developing World Fund made the following comment about MercadoLibre, Inc. (NASDAQ:MELI) in its Q3 2023 investor letter:
“Top contributors to performance for the quarter included Latin American marketplace MercadoLibre, Inc. (NASDAQ:MELI). MercadoLibre rose as a result of continued share gains across key markets and supportive Brazilian regulations aimed at creating a level playing field in cross-border e-commerce.”
3. Booking Holdings Inc. (NASDAQ:BKNG)
Number of Hedge Fund Holders: 78
Booking Holdings Inc. (NASDAQ:BKNG) is one of the biggest online travel players in the world. HSBC recently gave a Buy rating to Booking Holdings Inc. (NASDAQ:BKNG) and set a price target of $3,650.
Of the 910 hedge funds in Insider Monkey’s database, 78 hedge funds were long Booking Holdings Inc. (NASDAQ:BKNG). The most significant stakeholder of Booking Holdings Inc. (NASDAQ:BKNG) was Guardian Capital’s GuardCap Asset Management which had an $850 million stake in the company.
Wedgewood Partners made the following comment about Booking Holdings Inc. (NASDAQ:BKNG) in its Q3 2023 investor letter:
“Booking Holdings Inc. (NASDAQ:BKNG) also contributed to portfolio performance during the quarter. The Company reported continued healthy travel demand during the quarter that ended in June, with accelerating trends into July. In addition, Booking’s alt-accommodations sub-segment (about 35% of Booking’s total room nights) reported +11% room night growth, in-line with the Company’s largest pure-play alt-accommodations competitor, Airbnb. We estimate Booking’s total alt-accommodation room nights per quarter are approaching parity with Airbnb, yet Booking has a vastly superior GAAP operating margin structure – even as Booking aggressively outspends Airbnb on merchandising and payment functions, as well as paid search marketing efforts. There is still plenty of room for Booking to take wallet share in consumer travel budgets, which are still pent-up from the pandemic, particularly outside the United States.”
2. Alibaba Group Holding Limited (NYSE:BABA)
Number of Hedge Fund Holders: 112
Alibaba Group Holding Limited (NYSE:BABA) ranks 2nd in our list of the best ecommerce stocks to buy now. A total of 112 hedge funds were long Alibaba Group Holding Limited (NYSE:BABA), as per Insider Monkey’s database of 910 elite money managers. The biggest stake in Alibaba Group Holding Limited (NYSE:BABA) was owned by David Tepper’s Appaloosa Management LP which had a $373 million stake in the company.
Alibaba Group Holding Limited (NYSE:BABA) is pouring money into Chinese AI startups. Bloomberg reported that Alibaba Group Holding Limited (NYSE:BABA), along with Tencent (OTCPK:TCEHY) (OTCPK:TCTZF), was among the entities that invested $342 million in Chinese artificial intelligence startup Beijing Zhipu Huazhang Technology this year. Alibaba Group Holding Limited (NYSE:BABA) also joined Tencent (OTCPK:TCEHY) (OTCPK:TCTZF) for a $300 million funding round for AI company Baichuan Intelligent Technology.
L1 Long Short Fund made the following comment about Alibaba Group Holding Limited (NYSE:BABA) in its second quarter 2023 investor letter:
“Alibaba Group Holding Limited (NYSE:BABA) (Long -18%) shares weakened in recent months as Chinese reopening strength faded and macro-economic datapoints began sequentially declining. Nevertheless, we believe the Chinese government will use consumption as a key lever to reinvigorate the economy post-COVID lockdowns. Alibaba remains a high-quality business with leading positions in both eCommerce and Public Cloud, and management is taking proactive steps to unlock shareholder value. It has announced plans to split into six major business groups – Cloud Intelligence, Taobao Tmall, Local Services, Global Digital, Cainiao Smart Logistics and Digital Media, and Entertainment Group. Each group will be managed independently, with a separate CEO and board, have the flexibility to raise external capital and potentially pursue separate IPOs. We believe this restructure will be a strong positive catalyst to unlock the sum-of-the-parts valuation upside in the company.”
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 278
Amazon.com, Inc. (NASDAQ:AMZN) tops the list of the best ecommerce stocks to buy according to hedge funds, which is unsurprising. Amazon.com, Inc. (NASDAQ:AMZN) recently reported Q3 results, beating estimates for EPS and revenue. However, Amazon.com, Inc. (NASDAQ:AMZN)’s Cloud business missed estimates for the quarter. Still, CEO Andy Jassy reaffirmed that he sees huge growth for AWS in the coming days.
A total of 278 hedge funds tracked by Insider Monkey had stakes in Amazon.com, Inc. (NASDAQ:AMZN) as of the end of the June quarter. The biggest stake in Amazon.com, Inc. (NASDAQ:AMZN) is owned by Natixis Global Asset Management’s Harris Associates which had a $2 billion stake in the company.
White Falcon Capital Management made the following comment about Amazon.com, Inc. (NASDAQ:AMZN) in its Q3 2023 investor letter:
“There are comparable narratives involving NU Holdings, Amazon.com, Inc. (NASDAQ:AMZN), and Teck Resources, to name a few holdings from the White Falcon portfolio. Amazon constructed its logistics network and cloud computing infrastructure using yesterday’s currency, but it is poised to capitalize on this network with the inflated dollars of tomorrow. In essence, we believe we hold wonderful businesses with growing revenue streams and potential for operating leverage – all at reasonable valuations.”
You can also take a peek at 11 Undervalued Mid Cap Stocks To Buy According to Analysts and 12 Most Important Holidays in the US.
Suggested articles:
- 12 Best Performing Energy Stocks in 2023
- David Tepper Latest News and Portfolio Changes
- 25 Largest Economies in the World by 2075
Disclosure: None. 15 Best E-Commerce Stocks to Invest In is originally published on Insider Monkey.
