Four online retail companies that benefit from the prolong of work-from-home policy
- QIRA
- Aug 17, 2020
- 3 min read
2020-08-10 by QIRA
Our goal at Quant Investment Research & Analytics (“QIRA”) is to deliver stories with data visualization rather than long plain words. This would allow readers to grasp the gist of the financial market within the first glance.
Online retail has been prospering rapidly the past several years as consumers prefer convenience to brick-and-mortar retailers. What is more, Covid-19 this year and the consequential quarantine life has only accelerated this transformation. Thus, within this article, I have analyzed over 3500 tickers to show:
1. How each sector has been performing in 2020, and the monthly attribution.
2. Four tickers that I want to stress: AMZN, SHOP, OSTK, BIGC.
YTD average daily return ~0.07%, i.e. cumulative annual return 119.28%. From the chart, April almost made up for all the losses in March, then followed by a gradual slow-down on the positive side for the rest of Q2. However, the first week in August has witnessed the highest average daily return, led by Industrials (daily return ~1.42%) and Consumer Cyclical (daily return ~1.16%.)
Chart 1 – monthly attrition to YTD return (source: Quant Investment Research & Analytics)
However, when I only focus on the internet retail industry from Consumer Cyclical sector, internet retail firms have been beating the sector average every month. Especially ever since March’s COVID-19 quarantine period, I see the industry is on a steep upward trajectory, which triggered us covering the four online retail firms’ performance*.
Chart 2 – Internet Retail’s performance MoM. (source: Quant Investment Research & Analytics)
From year to date, Amazon’s price has gone up 66.88% to $3,167, Shopify up 158.24% to $1,053, and Overstock up 1372.3% to $104.
Chart 3 – Three major companies’ comparison. (source: Quant Investment Research & Analytics)
After drilling into details for each of the three above, I found some interesting trends:
1. Amazon’s overall YTD daily return is 0.39%, where surges concentrate during quarterly earnings report months, i.e. April, late June, and early July.
Chart 4 – Amazon’s return breakdown. (source: Quant Investment Research & Analytics)
2. Shopify’s overall YTD daily return is 0.75%, which has gradually become more stable as its price jumped over the $1,000 hurdle. I have reasons to believe it will keep fluctuating around the $1,000 line during the industry bubbles but may not see a major break through because of its fundamentals that will be covered in the next report.
Chart 5 – Shopify’s return breakdown. (source: Quant Investment Research & Analytics)
3. The highest daily return winner out of the three, Overstock witnessed a return as high as 2.16%, which can accumulate to 21816.39% annual return (of course this is idealized and not going to happen, but want to stress how fast the bubble expand during the last quarter.) Overstock’s price will keep increasing following this momentum with those technical traders, also Overstock’s price is considerably low compared to the other two firm’s prices. This would be an ideal short-term trading target.
Chart 6 – Overstock’s return breakdown. (source: Quant Investment Research & Analytics)
Last but not least, as I promised to deliver 4 companies worth getting into during this period, BigCommerce which went IPO on August 5th gained enough attention on the first day with its daily return soared to ~30%. Even though, the next day it went down by 15%, there are still a lot of retail traders who are not aware of this stock yet by the judge of trading volumes. Since this is a new firm coming to the public during an industrial bubble time, I wonder if traders will be discreet and pay attention to the firm’s financials rather than short term trading with momentum. On a side note, the timing is like when Beyondmeat came public when people were desperately in the need of environmentally friendly and tasty food, consequentially, its price quadrupled in three months.
Chart 7 – BigCommer’s daily closing price and trading volume. (source: Quant Investment Research & Analytics)
Write at last, I will follow the financials and business operation of SHOP, OSTK, and BIGC for the rest of the Q3, but for now, we will see how big this industry bubble can get.
Note: *Shopify is categorized as a Software Application firm from Yahoo Finance, but considering its business function comparing against Amazon, I decided to include Shopify in this article.
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