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Amazon speeds ahead of e-commerce competitors in Q2 2020 with a 41.8% QoQ rise

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Amazon has hit the $1trillion market capitalisation mark in Q2 after seeing a 41.8% rise since Q1m putting it way ahead of all ecommerce players. and eBay both saw their own market cap rise by 50% across the quarter and e-commerce giant, Alibaba, also reported an improvement in net earnings and an increase in active users on its platform, according to the data from Global Data. However, the growth is conservative at just over 10%, which was significantly lower than other online retailers.

Keshav Kumar Jha, Business Fundamentals Analyst at GlobalData, comments: “As social distancing remains one of the most utilized strategies to slow the spread of COVID-19, customers relied on e-commerce platforms for their everyday purchases. This drove Amazon’s stock to gain over 40% during April-June 2020. Investors took their cue from the company’s strong Q1 results, which witnessed online store sales growing by 24.3% and Amazon Web Services (AWS) sales growing by 32.7%.”

Jha also notes that : “This could be attributed to concerns about Chinese companies being delisted from the US stock exchange, following the passage of The Holding Foreign Companies Accountable Act (HFCAA) by the US Senate in May 2020.”

Major home improvement retailers, Home Depot and Lowe’s reported increased total sales and comparable sales in their Q1 2020 ended in the first week of May. Investors seemed impressed with both retailers’ continued investment in their digital capabilities expansion, including strengthening e-commerce and online offerings, which paid dividend with their stock surging by 36.9% and 68%, respectively, during April-June.

US-based pharmacy retailer CVS Health also reported over 9% increase in its pharmacy same-store sales in the three months ended March 31, 2020, compared to the prior year. This was driven primarily by COVID-19-related increased prescription volume. The company has continued with its tradition of paying cash dividends every quarter even amid the pandemic, which helped regain investors’ confidence with its stock climbing by 11.4% during the review period.

Meanwhile, subdued financial performance amid increasing concerns related to COVID-19 led to declines in QoQ MCap at Walgreens Boots Alliance, Ross Stores and Inditex.

Jha says: “eBay and Magazine Luiza have made entry into the top 25 retailers by MCap, with eBay gaining over 80% during the quarter, and Magazine Luiza’s stock rising by 96.3% during April-June. The Brazilian retailer’s stock surged on the back of strong digital sales in Q1 and its decision to sell books online.”

Jha adds: “The implementation of restrictive social distancing measures across various parts of the world has forced retailers to adopt a well-balanced omnichannel strategy to stay competitive. Retailers need to focus on strong omnichannel execution, along with product offerings, and fulfilment and delivery services to sustain the ongoing momentum.”

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