Dismissing e-commerce as a fading trend is farcical. I means it’s not the most ‘it’ thing for investors following the generative AI explosion, but the market still has a spectacular growth runway ahead. Moreover, a recent Shopify (NYSE:SHOP) report showed that global e-commerce revenues could potentially jump to $6.33 trillion this year and roughly $8 trillion by 2027. Hence, writing off cheap e-commerce stocks would be foolish.
As we look ahead, I expect traditional retail models to continue buckling under the weight of the e-commerce behemoth. Moreover, we’ve seen the e-commerce landscape experience a significant transformation, propelled by AI-powered advancements and the introduction of same-day shipping. This will likely reshape consumer behavior and interactions with brands, highlighting the sector’s massive long-term potential.
Cheap E-Commerce Stocks: Pinterest (PINS)
Social media giant Pinterest (NYSE:PINS) is arguably one of the most compelling comeback stories in its niche. After a rocky couple of years, the platform’s now back posting solid user growth and top-line expansion. Moreover, we’re seeing healthy margin improvements, which could potentially lead to a meaningful increase in free cash flows in the upcoming quarters. Additionally, despite an excellent run-up in PINS stock, it’s still trading more than 50% from its all-time high price of $89.15.
The company’s success is effectively tied to the visionary leadership of CEO Bill Ready, who has steered Pinterest into a social commerce platform. Ready’s enthusiasm for the platform’s robust advertising business, shoppability, and improved content relevance has been a game-changer. Over the past few years, Pinterest has focused its efforts on harnessing its potential to deliver a seamless e-commerce experience.
Recent earnings reports, particularly the latest first-quarter (Q1) results, showed a 23% year-over-year (YOY) revenue surge, with CEO Ready attributing the stellar performance to the platform’s enhanced shoppability.
Shopify (SHOP)
Shopify has been one of the biggest enablers in the eCommerce space, supported by its sturdy ecosystem offering a variety of innovative tools and robust support. Consequently, it has an excellent growth story behind it, having seen its revenues surge almost 50% on average in the past five years.
However, we’ve seen investors rotate out of SHOP stock of late, with concerns over its patchy profitability performance and the broader market challenges. Some have also criticized its pricing, even though it trades significantly behind its historical pricing metrics.
Despite the short-term impact on its stock price, Shopify’s CEO, Tobi Lütke, wants to play the long game with the company. The goal is to build long-term market value instead of chasing short-term profits. A big part of that is its global reach through offerings like Shopify Plus and the integration of AI to significantly boost efficiency. Also, it has significantly expanded its financial services with solutions such as Shopify Capital for small and medium-sized businesses.
Nevertheless, SHOP stock is not for the faint of heart, down 24% year-to-date (YTD). Hence, investors considering SHOP should focus on its long-term prospects and the compelling vision of its CEO.
Jumia Technologies (JMIA)
Jumia Technologies (NYSE:JMIA) is a leading eCommerce brand in the African region that has effectively positioned itself at the forefront of the continent’s digital revolution. In the past five years, we’ve seen Jumia grow at a rapid clip, with top-line exceeding 10% on average. However, the past year or so has been somewhat sluggish as its CEO, Francis Dufay, settled into his role. However, the outperformance in recent quarters suggests that CEO Dufay’s vision is coming to fruition, with robust growth expected ahead.
Jumia released its Q1 results recently, with sales up 18.4% YOY to $48.9 million. If we exclude the currency fluctuation effect, the company’s sales grew by a whopping 57%. Additionally, gross margins were up to 25% and 67% in constant currency terms. Moreover, Dufay put to rest concerns about Jumia’s significant liquidity drop due to devaluations, explaining that 80% of its cash is held in U.S. dollars.
Furthermore, Q1 saw JumiaPay gaining strong traction, with transactions rising 52% YOY, while its adjusted EBITSA loss contracted by an eye-brow raising 83% YOY. JMIA stock is trading firmly in the green of late but is still 26% behind its 52-week average.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
