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Investing.com -- The e-commerce sector has shown surprising strength in recent quarters, with MoffettNathanson’s analysis revealing that the rapid acceleration in growth rates cannot be attributed to any single temporary factor.
After examining potential contributors including tariff pull-forward effects, Google Search auction dynamics, discretionary spending recovery, AI improvements, and Buy Now, Pay Later adoption, the research firm concluded that the shift in consumer spending behavior appears more sustainable than previously thought.
This sustainability suggests investors should consider companies with significant exposure to discretionary spending recovery. Based on MoffettNathanson’s analysis, here are the top e-commerce stocks positioned to benefit from these trends:
Wayfair: The home goods retailer has experienced consistently declining cost-per-click (CPC) rates over the past twelve months as competitors have either left the auction or focused on other verticals. Data shows Wayfair saw the second and third highest rates of CPC decline in May and June.
While paid search traffic declined year-over-year for the last twelve months, decline rates began improving in April when Temu and Shein left the auction, with further improvement in May when Amazon reduced its presence. Organic search traffic made an impressive turnaround, shifting from -10% in March to +6% in April, with continued improvement throughout the year.
In recent news, Wayfair reported strong second-quarter results that beat revenue expectations, leading several firms including Jefferies and Truist Securities to raise their price targets. The company also announced it repurchased approximately $101 million of its 2028 convertible notes.
Etsy: The handmade and vintage marketplace has maintained stable CPCs despite competitors leaving the auction. This supports the company’s consistent messaging about the impact of Temu and Shein’s departure. While Etsy has historically struggled with paid search, citing Google’s Diversity Update as a headwind, the company has seen a slight improvement in paid search traffic decline rates.
However, organic search trends continue to show concerning rates of decline, indicating mixed results for the platform’s overall search performance.
Etsy’s second-quarter results also came in ahead of estimates, with both Gross Merchandise Sales and EBITDA exceeding expectations. Following the results, Truist Securities and Cantor Fitzgerald were among the firms that raised their price targets for the company.
eBay: With paid traffic representing only about 4% of eBay’s total traffic (compared to 14% for Wayfair and 9% for Etsy), the marketplace is less affected by the departure of competitors from search auctions.
The company’s international exposure further reduces this influence. While CPCs declined during the period analyzed, the impact is less material for eBay’s business. The company continues to face structural search headwinds like other e-commerce players but remains more insulated due to its dedicated buyer base.
eBay recently announced it will now offer free returns for eligible vehicle parts and accessories. The company also posted strong second-quarter results, with U.S. Gross Merchandise Volume accelerating, leading to price target increases from firms such as BofA Securities and CFRA.
MoffettNathanson’s analysis suggests these companies are well-positioned as the e-commerce sector experiences what appears to be a sustainable recovery rather than a temporary boost from one-time events.
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