The pandemic altered all kinds of human behavior, not least of which was the way we buy stuff. Strict lockdowns forced merchants and customers to get more creative than they ever would have been otherwise. As a result, global e-commerce sales are expected to top $5.5 trillion this year.
I know $5.5 trillion seems like a big number, but it's only around one-fifth of overall retail sales, according to eMarketer. That means there's still heaps of opportunity out there for innovative e-commerce businesses.
Image source: Getty Images.
These three companies are leading the transition away from bricks and mortar retail and making it easier for independent merchants to reach large international markets. Their businesses are flashing signs of success but their stock prices are in the dumps lately. Here's why they could make excellent additions to your portfolio.
StoneCo
StoneCo (STNE 3.25%) shares peaked last July and then tumbled by more than 80%. The Brazillian e-commerce stock recently jumped in response to a better than expected fourth-quarter earnings report that included a rosy outlook for the rest of 2022.
NASDAQ: STNE
Key Data Points
StoneCo provides financial technology solutions that allow Brazillian merchants to sell products in their stores, on their websites, and through mobile devices. In the fourth quarter, the company set a new record by adding 377,700 new clients. In 2021, the total number of clients actively using StoneCo's payment services shot up 128% to 1.8 million.
While StoneCo conducted a lot more business last year, net income plummeted 79% year over year to just 203 million Brazilian reais. Last year, the company merged with Linx, a provider of retail software solutions with over 70,000 clients. The new software business was a drag on earnings that probably won't happen again this year.
The addition of Linx clients should bolster the company's payment processing service and vice versa but managing them under the same umbrella didn't work out as well as hoped. Recently, StoneCo hired a new management team to manage the software business which will report as a separate operating segment from now on.
Global-E Online
Global-E Online (GLBE +0.30%) stock surged after the company's stock market debut last May. Unfortunately, shares of the international e-commerce specialist were hit hard in the second half of 2021 and most of 2022 so far.
NASDAQ: GLBE
Key Data Points
Today's e-commerce solutions make it easy for customers from all over the world to see your products, but payments and deliveries that cross international borders are still prohibitively difficult for most of the world's smaller merchants. Global-E Online's services enable direct-to-consumer e-commerce across borders and demand is going through the roof.
Last year, the gross value of merchandise sold with help from Global-E soared 87% year over year. At just $1.45 billion, though, there's clearly a lot of room for this company to grow. In the fourth quarter, the company signed up its first Australian merchant and a partnership in Japan is just getting off the ground.
A strategic partnership with Shopify could make 2022 another banner year for Global-E Online. The company's been onboarding Shopify-based merchants including Figs, the McClaren Formula-1 team, and Gap's latest collaboration with Kanye West. Cartier and several luxury brands under the LVMH umbrella also launched international campaigns with help from Global-E in the fourth quarter.
Amazon
The losses Amazon (AMZN 1.43%) piled on shareholders since it peaked last summer haven't been as severe as Global-E Online or StoneCo. At recent prices, America's e-commerce behemoth is down around 13% from a peak it reached in November.
NASDAQ: AMZN
Key Data Points
Depending on how you look at it, the stock is about to get a whole lot cheaper. Earlier this month, America's largest online retailer announced a 20-for-1 stock split.
In theory, stock splits shouldn't lead to significant gains or losses for shareholders because multiplying the number of outstanding shares, on its own, doesn't change the value of the underlying business. In practice, though, splits often lead to significant gains because they're a sign of confidence that boosts investor optimism. Splits also make popular stocks like Amazon more accessible to retail investors who can drive prices higher.
It's easy to see why Amazon's confident enough to split each existing share of its stock into 20 even pieces. Global supply chain bottlenecks that have been plaguing retailers this year have been mitigated by early buying Amazon completed in the fourth quarter of 2021.
Inflationary pressure is pinching e-commerce profits at the moment, but that isn't going to stop Amazon's bottom line from growing. That's because Amazon Web Services (AWS) generates around three-fifths of the company's operating income. Cloud computing isn't immune to supply chain issues or inflation, but it's a lot less sensitive than retail.
