It's been a safe bet in each of the last few years that Cyber Monday sales will reach a new record while also blowing past most investors' expectations. In 2018, online revenue during that key 24-hour period following Black Friday soared 19% to just under $8 billion.
A strong economy, plus the continued shift toward e-commerce purchasing, will likely power another blockbuster Cyber Monday this year. It couldn't come at a better time for a few companies, though, which will need a successful outing this week for a chance to win their way back into investors' good graces.
Let's take a look at why Wayfair (W -6.77%), iRobot (IRBT -0.14%), and eBay (EBAY 0.04%) need a killer Cyber Monday this year.
Image source: Getty Images.
Wayfair aims for a rebound
Wayfair stock had a strong start to 2019, nearly doubling by March thanks to surging market share gains. But investors have turned far more cautious on the e-commerce retailer in recent months and shares are now underperforming the wider market heading into Cyber Monday.
Part of that concern is tied to soaring spending, as the home furnishings specialist directs cash toward its international expansion and toward bulking up its proprietary shipping network in the U.S. market. Yet investors got a new warning sign about the business in late October when Wayfair revealed a surprise loss in that division. CEO Niraj Shah and his team said at the time that slower growth is a temporary problem that's mainly caused by tariff price spikes.
Executives are hoping to get growth back on track in the next few quarters, and this holiday period will mark a prime opportunity to show that its asset-light selling approach can work through a wide range of industry selling conditions, including as prices jump on Chinese imports.
iRobot's price gambit
Robotic vacuum cleaners have been a staple for holiday shoppers in recent years. A strong holiday period in 2018, in fact, helped industry leader iRobot trounce revenue expectations on its way to passing $1 billion in annual revenue for the first time.
What a difference a year makes. iRobot's sales and profit trends have been harmed in 2019 by surging tariffs on Chinese imports. The Roomba manufacturer had to reduce its outlook in each of the last three quarterly reports, in fact. Sales volumes are up just 8% over the last nine months compared to 21% in the prior-year period.
iRobot shifted strategies at the end of Q3, cutting prices in a bid to protect its market share. Investors will soon find out whether that adjustment allowed the company to dominate sales through retailers like Amazon.com and Target and put the company back on a path toward head-turning growth.
eBay has to change the narrative
eBay investors are understandably losing patience with the company right now. The marketplace's expected growth rebound fizzled out in 2019, with sales volumes falling 6% in the U.S. during the most recent quarter and rising by just 1% internationally. Meanwhile, eBay has left investors guessing for the better part of the year about what it plans to do with its StubHub and Classifieds segments. Management is reviewing options on selling or spinning off these divisions but said in October that they've made no final determination yet.
Shareholders should learn about the fate of those businesses when eBay reports fourth-quarter results in early 2020. In the meantime, the retailer needs a big Cyber Monday sales haul to demonstrate that management's efforts to improve the shopping experience are working. Otherwise, if sales volumes keep falling, bullish investors will find it hard to justify a rally in the stock price even if eBay continues to crank out industry-leading cash flow and profitability.
