2 E-Commerce Stocks to Consider in 2024
Although e-commerce soared in popularity during the pandemic, it is a market which has been steadily growing for the last two decades. Is it worth investing in e-commerce in 2024? In this article, we take a look at this question and highlight 2 e-commerce stocks for investors to consider.
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Why Invest in E-Commerce?
During the height of the pandemic, e-commerce was one of a number of industries which greatly benefitted from the social restrictions in place. As many people were confined at home, unable or unwilling to visit the high street, they turned to online retail.
Consequently, e-commerce stocks soared. However, restrictions relaxed, eventually disappearing altogether and people were no longer reliant on online retail. This, coupled with a wider stock market sell-off, led to many pandemic-era favourite shares plunging in value.
E-commerce is unlikely to enjoy more ideal operating conditions than they had during the pandemic. So, is it still worth investing in e-commerce stocks in 2024?
Even if we ignore the pandemic, the e-commerce market has been growing steadily for a long time. Naturally, total global revenue generated by e-commerce jumped in 2020 and 2021, but it is forecast to grow further in 2022, and to keep growing year on year up to 2025.
Furthermore, although worldwide e-commerce will generate an estimated $4.2 trillion of revenue in 2022, this still represents less than 20% of total global retail sales. This means that e-commerce still has plenty of room to grow in the future. In fact, it’s forecast that by 2026, online retail will account for almost a quarter of total global sales.
Top E-Commerce Stocks to Watch
So, with the e-commerce market forecast to keep growing, what are the top e-commerce stocks? After considering the options, we have landed on 2 stocks that investors might want to consider adding to their portfolio for 2024 and beyond.
Amazon
Perhaps a bit predictable, but sometimes the best investments are the most obvious and there are many factors which make Amazon a top contender in terms of e-commerce stocks.
The company itself needs little introduction. Amazon has successfully penetrated many markets around the world and cemented itself as a global e-commerce leader. However, by far, its largest market remains the US, generating almost 70% of its e-commerce revenue in 2021.
As a percentage of total retail sales, e-commerce has more than tripled in the US since 2010. But, despite this impressive growth, it still only accounts for less than 15% of total retail. So Amazon still has a lot of room left for growth in its domestic market, and it has a huge amount of cash to help fund this growth.
Furthermore, if we factor in that Amazon has diversified beyond e-commerce - particularly its profitable foray into cloud computing, where it is the global market leader – its attractiveness grows.
Like many other technology stocks, the Amazon share price has taken a bit of a hammering in 2022. In this first ten months of the year, the stock fell almost 40%, but this drop is largely reflective of wider economic issues, rather than any particular misstep from Amazon itself.
In the first nine months of 2022, Amazon’s revenue and operating income dropped year on year. As well as being subject to more testing economic conditions, these results also appear less favourable due to the fact that during the comparison period, 2021, many customers still found themselves in lockdown conditions.
Amazon recorded a net loss over this same period of $3 billion, compared to net income of $19 billion the previous year. However, as well as the factors highlighted above, much of this loss can be attributed to the plummeting share price of electric vehicle manufacturer Rivian Automotive, of which Amazon is a major stakeholder.
MercadoLibre
Often overlooked by investors due to political and economic instability, Latin America has a population of 660 million people, 30% more than the EU, making it one of the world’s largest markets.
Whilst Amazon has expanded aggressively and successfully around the traditional West, it has not been as successful in Latin America – although there are reportedly plans in place to remedy this in the future. Amazon’s lack of penetration in this market has been to the great benefit of our next e-commerce stock, MercadoLibre.
Frequently touted as the “Amazon of Latin America”, MercadoLibre is the undisputed king when it comes to e-commerce south of the US border.
MercadoLibre is present in 18 countries throughout Latin America, with a leading market share in the region’s three largest economies – Brazil, Mexico and Argentina. In the first nine months of 2022, the company recorded a total of 127 million unique users. Besides e-commerce, MercadoLibre has diversified its business, offering payment processing, shipping and credit services. In particular, its payment processing arm, MercadoPago, is a key revenue driver for the company and is thriving in a region which heavily relies on payment services.
As with the US, whilst the Latin American e-commerce market has grown in recent years, it remains relatively low as a percentage of total retail sales, estimated to pass just 7% in 2023.
What’s particularly impressive about MercadoLibre is its strong growth, even in the face of easing pandemic restrictions and worldwide economic headwinds. In the first nine months of 2022 net revenue rose more than 50% year on year whilst gross profit soared by more than 70%.
However, in the price chart for MercadoLibre we see a familiar story. After share price hit $1,953.83 in September 2021, the e-commerce stock ended October 2022 at $901.62, a fall of more than 50%.
Online Retail Faces Headwinds
It seems e-commerce is here to stay and is likely to expand further in the future. But it would be naïve of us to ignore the serious headwinds that it, and many other industries, currently face.
Global inflation is running high and, as central banks around the world grapple to bring it under control, interest rates are also rising. These two factors are squeezing discretionary incomes around the globe, meaning that consumers have less money to buy non-essential goods.
This is likely to translate into a fall in demand for e-commerce. Add to this the fact that many economies are forecast to slip into recession in the near future and it seems that e-commerce stocks could be in for stormy weather. Therefore, before taking any investment decisions, it is important to conduct your own independent research, thoroughly analyse the potential risk and reward, and be sure to only invest money which you could afford to live without.
How to Invest in E-Commerce Stocks
With an Invest.MT5 account from Admiral Markets, you can invest in both the e-commerce stocks in this article as well as over 4,500 other stocks and more than 200 Exchange-Traded Funds (ETFs)! In order to start investing in e-commerce stocks, follow these steps:
- Register for an Invest.MT5 account and log in to the Dashboard
- Find your account details in the dashboard and click “Invest” to open the WebTrader
- In the Market Watch search for the e-commerce stocks you want to invest in and drag it onto the chart to open a price chart
- Click “New Order” at the top of the screen, enter the number of shares you want to purchase and click “Buy” to send your order to the market!
Investing with Admiral Markets
As well as being able to invest thousands of the world’s top stocks and ETFs, owners of an Invest.MT5 account also benefit from:
- Opening an account with a deposit of just €1
- Exclusive access to our Premium Analytics portal
- The ability to invest for less with fractional shares
In order to start enjoying these benefits and many more, click the banner below:
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