15 Jan 2021
Posted in Business Fundamentals
Amazon and Alibaba surge ahead of competitors in ranking of top 25 publicly trading retailers by MCap in Q3 2020
Amazon and Alibaba surged ahead of the competition in the third quarter (Q3) of 2020 as the two companies collectively accounted for approximately half of the total market capitalization (MCap) reported by the top 25 global retailers. The growth of online shopping during lockdowns amid the COVID-19 pandemic provided a boost for their e-commerce platforms, according to GlobalData, a leading data and analytics company.
Keshav Kumar Jha, Business Fundamentals Analyst at GlobalData, comments: “Amazon and Alibaba’s strong e-commerce platforms benefitted the companies in 2020. Amazon reported a 47% rise in its online retail revenue in Q2 over the same quarter last year, whereas Alibaba recorded a 33% rise in e-commerce revenue in its Q1 over the same quarter last year. Additionally, robust performances of their cloud computing divisions helped the companies to grow amid the shift to remote working and virtual learning.
“Meanwhile, other major e-commerce retailers such as JD.com, Pinduoduo and eBay reported declines in their MCap during Q3, mainly due to lower than expected e-commerce revenues and profit booking by investors in the latter part of the quarter.”
The third quarter also remained challenging for US-based pharmacy retailers such as CVS Health and Walgreens Boots Alliance, with their MCap declining by over 10%.
Jha continues: “Besides subdued financial performance, Amazon’s announcement of its intent to enter the prescription drug market with Amazon Pharmacy made investors skeptical about these stocks.”
Major home improvement retailers, Home Depot and Lowe’s, continued investment in building their digital capabilities, including strengthening e-commerce and online offerings, along with their improving earnings performances, retained interest in these stocks from investors.
Jha adds: “Best Buy forayed into the top 25 retailers by MCap during Q3, with MCap increasing 27.8% during the quarter. As of 30 September 2020, the company’s stock surged 120% from its 52-week low of $50.69 on 23 March. The US-based consumer electronics retailer’s omnichannel strategy is paying dividends to the company with its domestic comparable online sales improving 242% in its Q2 ending August 2020 and Enterprise comparable sales increasing 5.8%.”