The bumpy ride investors have experienced so far this year continues as the bear market drags on and market watchers remain cautious. That said, evidence suggests there are reasons to be optimistic, with some megabanks recently reporting that the resiliency of consumers remains strong. Investors took the news as an excuse to wade back into the market, buying up a broad swath of technology and consumer-facing stocks.
With that as a backdrop, several e-commerce stocks rallied on Monday. Shares of Amazon (AMZN 0.68%) climbed as much as 3.2%, Global-e Online (GLBE 5.79%) jumped as much as 6.9%, and Shopify (SHOP 4.89%) surged as high as 9.4%. As of 1:03 p.m. ET, the trio were still trending higher, up 2.9%, 5.2%, and 8.5%, respectively.
Several major banks have reported results in recent days and management commentary suggests consumers continue to bolster the U.S. economy. While fears of a recession remain, these financial institutions don't appear to be exhibiting signs of major weakness, at least not yet.
As part of the company's second-quarter earnings report, Bank of America (BAC -0.57%) CEO Brian Moynihan said, "Our U.S. consumer clients remained resilient with continued strong deposit balances and spending levels. Loan growth continued across our franchise."
Commentary by Citigroup (C -0.33%) executives was equally optimistic. During the company's second-quarter conference call on Friday, CEO Jane Fraser said, "While sentiment has shifted, little of the data I see tells me the U.S. is on the cusp of a recession. Consumer spending remains well above pre-COVID levels with household savings providing a cushion for future stress." She went on to say, "You can see how resilient the consumer is in the U.S. through the elevated payment rates and the low level of credit losses."
There is additional data to suggest consumer spending remains strong. Retail and food services sales during the month of June were stronger than expected, rising 1% compared to May, even in the face of decades-high inflation. Consumer spending is the foundation of the economy, accounting for 70% of gross domestic product (GDP) in the U.S., and it appears this has thus far kept the economy from slipping into a recession.
Taking a step back, all this talk of recession obscures the massive opportunity that remains for companies doing business online. E-commerce sales accounted for roughly 14% of total retail in the U.S. during the first quarter, more than doubling over the past decade. And while global digital retail worldwide topped $4.9 trillion last year, it's expected to grow to roughly $7.4 trillion by 2025, suggesting a long runway for growth.
Amazon announced its "biggest Prime Day event ever" just last week and is expected to control nearly 40% of online sales in the U.S. this year, or more than the next 14 digital retailers combined. Shopify is the industry-leading software-as-a-service (SaaS) platform providing merchants with all the tools they need to sell their goods and services online. And for companies wanting to make e-commerce sales across borders, Global-e Online reduces the complexity of the process, handling currency exchange, regulatory compliance, and customs and duties.
Finally, each of these stocks is a relative bargain, comparatively speaking. Amazon, Shopify, and Global-e Online are currently trading at two, seven, and nine times forward sales, respectively -- valuations not seen in years. Investors are cherry-picking stocks that they believe have simply fallen too far, helping send these e-commerce players into rally mode.