In the e-commerce sector, eBay is in the midst of a transformation, Wish is strategizing for growth and Etsy is contending with performance issues, attracting different levels of attention from investors and analysts. 

With a pandemic in the rear view mirror online retailers are no longer very alluring for investors. Etsy, the online craft platform, declined 48% closing at $61.89. Even worse has been the stock of ContextLogic’s Wish, dropping 84% closing at $4.47. The only exception is eBay, the longest established online selling platform which grow only 5% closing at $42.89 on Sept.27.

ETSY’s stock price is steadily falling due to changing consumer preferences, with more spending shifting from goods to services. Meanwhile, Wish has faced challenges in remaining competitive, especially with the emergence of new rivals like Temu, an online store run by the Chinese company PDD Holdings Inc., selling discounted products shipped directly from China to customers. Additionally, eBay is grappling with performance issues, including a declining customer base.

With a substantial user base and a successful tech-driven approach, eBay shows promise. Investments in advertising and payments are boosting revenue growth, but the continuing transformation raises risks in execution, keeping analysts cautious. 

In JP Morgan’s research analysis published on Aug. 17, the analysts emphasized their cautious approach, stating, “we stay on the sidelines as we think eBay still is in early innings of a multi-year transformation, which comes with execution risk & investments in a profit-centric environment, and we would like to have more confidence in achieving higher than MSD% GMV growth to become more constructive.” 

eBay’s growth potential is underpinned by a positive outlook in a $750B stock market, where the company focuses on attracting buyers and expanding into the resale sector. They’re also making strides in boosting advertising revenue. 

But lingering inflationary pressures, especially in international markets, could impede eBay’s growth, and its ability to accelerate sales remains uncertain. Long-term investments may initially affect profits, and there’s a looming risk that eBay’s strategies may not yield the expected results.

As competition from rival marketplaces intensifies, particularly among younger consumers, eBay faces the task of redefining its brand perception and staying relevant.

According to analysts’ notes, investors and observers should closely monitor eBay’s progress in enhancing user experiences, implementing artificial intelligence initiatives and navigating international markets. 

Etsy stands out as a major underperformer this year, with its stock plummeting. Analysts have also downgraded Etsy’s earnings forecasts for the coming year by 5%. A significant factor contributing to this underperformance is the decline in Etsy’s price-to-earnings multiples, dropping from approximately 25 times in January to the current 11, primarily because of adjustments in expected revenue growth.

“Admittedly, ETSY’s top-line growth has proven to be highly sensitive to macro conditions, and we expect the correlation to continue over the next several quarters,” Wolf Research analysts mentioned in their study released Sept.13.

Etsy’s stock price has been lagging behind those of other internet companies by 83 points this year, and while economic uncertainties cause some concerns, analysts say there are multiple reasons to be optimistic about the company’s performance in the next 12 to 18 months. As a result, they have upgraded their rating on Etsy’s stock to “Outperform,” indicating their belief that it will outperform expectations.

In contrast, ContextLogic’s Wish targets a specific market segment such as budget-conscious customers by offering affordable, unbranded products. With growth potential, but challenges related to user retention and a new product strategy are a cause for concern, leading analysts to adopt a wait-and-see approach. 

JP Morgan noted:  “We believe WISH’s new product strategy will need several quarters to show results in a more normalized environment and carries material execution risk. As such, we remain on the sidelines for now.” ContextLogic is in the early stages of a multi-year transformation, focusing on improving user experiences, merchant relationships, logistics and operational efficiency.  

WISH faces a dual scenario. It’s eyeing a massive market opportunity with over 1 billion underserved households, each with an annual income below $75,000, globally except for China and India,. Recent cost-saving measures, including a substantial workforce reduction, are expected to save $43 million to $46 million annually by the fourth quarter, enhancing profitability amid economic challenges. Successful execution of these strategies could elevate its valuation and attract potential activist investors, given its healthy cash reserves and debt-free status.

But caution prevails, as macroeconomic conditions could impact customer retention, especially among lower-income users. Ambitious plans for new product strategies and rebranding pose execution risks, and their impact on revenue growth remains uncertain.The path to profitability and cash management amid  the turnaround  also raise questions. Maintaining brand reputation is vital to sustaining consumer trust. 

As analysts continue to rate Wish as “underweight,” investors express their dissatisfaction with Wish’s downward trajectory. “Do not get excited about any of the gains,” a user posted on Stocktwits, a social network for investors and traders. “They will always be lost eventually here. Maybe tomorrow or maybe even today.”.