What happened
Shares of Dada Nexus Limited (DADA 0.55%) were up sharply on Wednesday after an analyst upgraded its outlook for the company. The stock has already nearly doubled in 2020, but that didn't keep it from climbing higher today. As of 11 a.m. EST, it was up 10%.
So what
According to The Fly, Goldman Sachs analyst Ronald Keung believes economic trends are in Dada Nexus' favor. Specifically, the coronavirus pandemic has pushed the adoption of online grocery shopping around the world, including in China where this international company operates.
Image source: Getty Images.
That opinion is certainly in line with what investors have seen so far this year. For example, back in the second quarter, Dada Nexus reported a big jump in deliveries. Its delivery service, called Dada Now, made 925.6 million deliveries for the 12-month period ending June 30. That was a 65% increase from the comparable prior-year period.
Now what
When it comes to the coronavirus, there are two kinds of consumer shifts that investors should distinguish. The first is a temporary shift out of necessity -- think of trends like pantry-packing and hand sanitizer purchases. These consumer behaviors are likely to return to historical norms once the pandemic is over. But in some cases, the coronavirus permanently pushed the adoption of certain services and technologies.
Grocery e-commerce and delivery may indeed be one those permanent changes. So Keung is right to highlight its significance for Dada Nexus. Investors will get a better glimpse of just how profound shifting consumer trends are when the company reports earnings. The report is expected sometime around Nov. 23.
