Shares of online home goods retailer Wayfair (NYSE: W) jumped 5.6% in the morning session after Black Friday generated $9.8 billion in U.S. online sales, according to Adobe Analytics, up 7.5% from a year ago. This spending increase likely signals a healthier-than-feared consumer who is more open to spending compared to last year, when inflation was hitting wallets hard. Separately, Shopify also announced a record-breaking Black Friday, with global sales from its merchants totaling $4.1 billion, up 22% year on year. This is further evidence of not only a consumer that is willing to spend but that e-commerce sales in particular are strong. The momentum is likely to extend to Cyber Monday (27th November 2023), when many consumers are back at work but carving out a portion of their days to shop online. Results of Cyber Monday sales could further impact e-commerce stocks.
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What is the market telling us:
Wayfair's shares are very volatile and over the last year have had 65 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 7 months ago, when the stock gained 18.1% on the news that the company reported first-quarter results that exceeded analysts' revenue and earnings per share (EPS) expectations. Active customers also came in above estimates. The company nearly broke even on adjusted EBITDA, with management expecting to have positive Adjusted EBITDA in the second quarter. Improving profitability is a welcome dynamic for the stock. Overall , it was a strong quarter.
Wayfair is up 58.9% since the beginning of the year, but at $52.13 per share it is still trading 38.4% below its 52-week high of $84.67 from August 2023. Investors who bought $1,000 worth of Wayfair's shares 5 years ago would now be looking at an investment worth $568.29.
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