Along with the meteoric fall of Netflix that took down much of the entertainment industry, internet retail is leading the way. down for technology stocks. Among these names, Wayfair (NYSE:W -9.0%), Etsy (NASDAQ: ETSY -8.8%), and Carvana (NYSE: CVNA -9.0%) collapse by the largest margin.
- Both Carvana and Wayfair were cited by Seeking Alpha’s Quantitative Strategies team as stocks to avoid at this time.
The market segment has been hit by a series of bad news lately, with higher rates threatening the multiple-growth stocks that populate the sector, ongoing supply chain issues, and now Netflix’s big fail. drags the entire tech sector lower as it reinforces concerns about bubble-like valuations.
While online retail has recently been cited as a bright spot in retail sales numbers, the momentum from Netflix’s collapse appears to be impacting e-commerce giant Amazon (AMZN) and growing. add to the aforementioned factors that are compressing the industry.
For Etsy (ETSY), the broader market dynamics weighing on the industry only add to growing concerns about a potential sellers’ syndicate forming to combat rising fees. In another kind of contagion, this concern over fees could also be fueling the sharp decline in Shopify (SHOP) stock. Each stock lost about half of its value in the first few months of 2022 alone.
In terms of pricing, there are fears that inflationary pressures will hurt retailers for big-ticket items like furniture and cars, which explains share price erosion for companies like Wayfair (W) and Carvana (CVNA ).
“We continue to look for signs that the conflict in Ukraine, inflation, rising interest rates and recession concerns are impacting non-discretionary sales to consumers (especially higher ASP products). high),” Baird analyst Colin Sebastian wrote in a recent note to clients.
He also noted that Google search trends for “Carvana”, “Used cars” and “Vroom” are all dropping double digits week-on-week, while furniture search trends related to companies like Wayfair have remained largely flat. While tax refunds may bounce off these trends, the rapidly deteriorating search interest in automobiles in particular has been noted as a concern.
Carvana (CVNA) is expected to announce its first quarter results after market close. The company has been inconsistent in earnings releases in recent quarters, beating EPS estimates only 25% of the time.
Learn more about what to expect from Carvana after the close.