28 Apr 2021
Posted in Business Fundamentals
Majority of top 25 global retailers by Market Cap reported decline in Q1 2021, finds GlobalData
The dream run of major online retailers including Amazon, Alibaba, Pinduoduo and JD.com came to a halt with a 6% decline in their cumulative valuation in Q1 2021 over that in Q4 2020, according to GlobalData, a leading data and analytics company.
Keshav Kumar Jha, Business Fundamentals Analyst at GlobalData, comments: “Despite an impressive performance in FY2020 – with growth of over 30% in year-on-year (YoY) revenue and 80% in net income – Amazon’s stock fell after its announcement that Jeff Bezos was stepping down as CEO and being replaced by the head of its cloud business Andrew R. Jassy in Q3 2021.
“The company’s stock was also affected by increasing inflationary pressure and growing demand for the enactment of laws to conduct antitrust scrutiny and the divestiture of big firms to prevent them from creating an anti-competitive environment.”
Investors also remained concerned about Alibaba’s alleged feud with Chinese regulators after the failed bid of Ant Group IPO, and the better-than-expected Q3 (ending Dec 31, 2020) earnings failed to assuage their concerns.
Pinduoduo’s and JD.com’s stock performance also remained lacklustre despite a continuous increase in active users on their respective platforms and growth in earnings. Worries about the delisting of both the stocks following the implementation of the Holding Foreign Companies Accountable Act (HFCAA) by the US Securities and Exchange Commission (SEC) led to their stocks losing steam.
Jha continues: “Apart from the looming regulatory risks, Colin Huang, Pinduoduo’s founder and chairman, stepping down also heightened fears about the government’s scrutiny and regulatory crackdown on the entity in China.”
South Korean e-commerce retailer, Coupang, was listed on NYSE in March and clocked valuation of over $100bn on the first day of trading. eBay was the only e-commerce retailer to record growth mainly due to the increase in active users on its platform, owing to growth in demand for e-commerce and contactless delivery services worldwide, following the outbreak of the COVID-19 pandemic.
Retailers including Walmart, Nike, Costco, adidas, Dollar General and Alimentation Couche-Tard recorded over 5% quarter-on-quarter (QoQ) decline in MCap. Lower-than expected earnings and weaker guidance kept investors bearish on these stocks.
Two of the US-based pharmacy retailers, CVS Health and Walgreens Boots Alliance, reported an increase in their valuation in Q1. The increase in the number of prescriptions, extensive diagnostic testing, especially the COVID-19 testing, and the vaccination drive kept their stocks in demand.