As online marketplace stocks’ Q2 earnings season wraps, let's dig into this quarter's best and worst performers, including Cars.com (NYSE:CARS) and its peers.
Marketplaces have existed for centuries. Where once it was a main street in a small town or a mall in the suburbs, sellers benefitted from proximity to one another because they could draw customers by offering convenience and selection. Today, a myriad of online marketplaces fulfill that same role, aggregating large customer bases, which attracts commission paying sellers, generating flywheel scale effects which feed back into further customer acquisition.
The 11 online marketplace stocks we track reported a weaker Q2; on average, revenues missed analyst consensus estimates by 0.54%, while on average next quarter revenue guidance was 1.72% under consensus. There has been a stampede out of high valuation technology stocks as raising interest rates encourages investors to value profits over growth again and online marketplace stocks have not been spared, with share prices down 13.9% since the previous earnings results, on average.
Originally started as a joint venture between several media companies including The Washington Post and The New York Times, Cars.com (NYSE:CARS) is a digital marketplace that connects new and used car buyers and sellers.
Cars.com reported revenues of $168.2 million, up 3.26% year on year, missing analyst expectations by 0.53%. It was a weak quarter for the company, with slow revenue growth and a decline in its user base. Additionally, while next quarter's revenue guidance was above Wall Street analysts' expectations, adjusted EBITDA guidance was below.
"We delivered solid results in the second quarter and garnered positive dealer reception and adoption of our Preferred and Premium Packages and digital solutions," said Alex Vetter, Chief Executive Officer.
The stock is down 14.6% since the results and currently trades at $19.14.Is now the time to buy Cars.com? Read our full report on Cars.com here.
Best Q2: MercadoLibre (NASDAQ:MELI)
Originally started as an online auction platform, MercadoLibre (NASDAQ:MELI) today is a one-stop e-commerce marketplace in Latin America.
MercadoLibre reported revenues of $3.42 billion, up 31.5% year on year, beating analyst expectations by 4.4%. It was a very strong quarter for the company, with impressive growth in its user base and a decent beat of analysts' revenue estimates.
MercadoLibre scored the strongest analyst estimates beat and fastest revenue growth among its peers. The company reported 109 million daily active users, up 29.8% year on year. The stock is up 18.1% since the results and currently trades at $1,383.42.
Is now the time to buy MercadoLibre? Access our full analysis of the earnings results here, it's free.
Weakest Q2: Sea (NYSE:SE)
Founded in 2009 and a publicly-traded company since 2017, Sea Limited (NYSE:SE) started as a gaming platform and has since expanded to offer a variety of services such as e-commerce, digital payments, and financial services across Southeast Asia.
Sea reported revenues of $3.1 billion, up 5.2% year on year, missing analyst expectations by 4.68%. It was a weak quarter for the company, with a decline in its user base and a miss of analysts' revenue estimates.
The stock is down 29.2% since the results and currently trades at $40.2.
LegalZoom (NASDAQ:LZ) is an online platform that provides online legal services to individuals and small businesses. The company’s co-founders found it difficult and expensive to find lawyers and file paperwork when trying to start a business so they started LegalZoom instead to address this pain point.
LegalZoom reported revenues of $168.9 million, up 3.04% year on year, beating analyst expectations by 1.1%. It was a mixed quarter for the company, with revenue coming in ahead of Wall Street's expectations, even if just narrowly. On the other hand, its weak revenue growth wasn't great. Also, while next quarter's revenue guidance was in line, adjusted EBITDA guidance was below.
The company reported 1.55 million users, up 11.4% year on year. The stock is down 36.7% since the results and currently trades at $9.71.
Originally featuring a library that included many of founder Jon Oringer’s photos, Shutterstock (NYSE:SSTK) is now a digital platform where customers can license and use hundreds of millions of pieces of content.
Shutterstock reported revenues of $208.8 million, flat year on year, missing analyst expectations by 2.6%. It was a mixed quarter for the company, with full-year revenue guidance coming in higher than Wall Street's expectations. On the other hand, revenue growth was quite weak. In addition, the company's gross margin also deteriorated.
Shutterstock achieved the highest full year guidance raise among its peers. The company reported 0.56 million users, up 51.1% year on year. The stock is down 19.4% since the results and currently trades at $41.5.
The author has no position in any of the stocks mentioned