In this article, we discuss 5 best small cap ecommerce stocks to buy now. If you want to read about some more small cap ecommerce stocks, go directly to 12 Best Small Cap Ecommerce Stocks to Buy.
5. Overstock.com, Inc. (NASDAQ:OSTK)
Number of Hedge Fund Holders: 17
Overstock.com, Inc. (NASDAQ:OSTK) operates as an online retailer in the United States. It is one of the best ecommerce stocks to invest in. On July 29, Overstock.com revealed that it was named to the Parity.org’s Best Companies for Women to Advance for the third year in a row. The award lauded the promotion of diversity and supporting career development at the core of Overstock’s company culture.
On October 4, investment advisory Guggenheim assumed coverage of Overstock.com, Inc. (NASDAQ:OSTK) with a Neutral rating and no price target. Analyst Steven Forbes issued the ratings update.
At the end of the second quarter of 2022, 17 hedge funds in the database of Insider Monkey held stakes worth $147 million in Overstock.com, Inc. (NASDAQ:OSTK), compared to 23 in the previous quarter worth $212.1 million.
4. Revolve Group, Inc. (NYSE:RVLV)
Number of Hedge Fund Holders: 20
Revolve Group, Inc. (NYSE:RVLV) operates as an online fashion retailer for consumers in the United States and internationally. It is one of the top ecommerce stocks to invest in. On October 10, Revolve Group stated that it has partnered with Nykaa Fashion, an online clothing store in India. In this partnership, Nykaa Fashion will mediate for customers and help them shop in a seamless manner.
On August 8, Needham analyst Anna Andreeva maintained a Buy rating on Revolve Group, Inc. (NYSE:RVLV) stock and lowered the price target to $40 from $60, noting that the company’s Q2 results saw strong new customer ads, acceleration in average order value, and robust gross margins.
Among the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Revolve Group, Inc. (NYSE:RVLV), with 2.2 million shares worth more than $58 million.
In its Q2 2022 investor letter, Polen Capital, an asset management firm, highlighted a few stocks and Revolve Group, Inc. (NYSE:RVLV) was one of them. Here is what the fund said:
“Revolve Group, Inc. (NYSE:RVLV) is an e-commerce fashion company we believe is executing well. The stock weakness during the period was more sentiment-driven as the market grew increasingly concerned about consumer spending a recession.
We acknowledge that there could be some softness in the company’s near-term results as consumers tighten their purse strings, but we believe there remains tremendous long-term potential for this business. We have also observed that Revolve’s management team is exceptional when it comes to navigating unprecedented challenges, as they did during the pandemic and have a long history of doing so since being founded in 2003 and bootstrapped by their founders. Management preparedness is an important marker we are looking for during this challenging time and Revolve’s management team unquestionably passes the test in this area. We added to our position on this weakness.”
3. Wayfair Inc. (NYSE:W)
Number of Hedge Fund Holders: 22
Wayfair Inc. (NYSE:W) engages in the e-commerce business in the United States and internationally. It is one of the elite ecommerce stocks to invest in. On October 13, Wayfair noted that it will host the second Way Day this year on October 6. Wayfair also stated that it will give an 80% discount on items like decor, furniture, and housewares. Brands like Dyson, Kohler, Henckels, and Rachael Ray will be included.
On October 10, Goldman Sachs analyst Alexandra Steiger initiated coverage of Wayfair Inc. (NYSE:W) stock with a Neutral rating and a $36 price target, noting that the company’s multi-year revenue growth potential is constructive.
At the end of the second quarter of 2022, 22 hedge funds in the database of Insider Monkey held stakes worth $630.5 million in Wayfair Inc. (NYSE:W), compared to 27 in the preceding quarter worth $1.4 billion.
In its Q2 2022 investor letter, Value Vulcan Partners, an asset management firm, highlighted a few stocks and Wayfair Inc. (NYSE:W) was one of them. Here is what the fund said:
“We sold Wayfair Inc. (NYSE:W) during the quarter. It was a mistake. Wayfair Inc. is a leading e-commerce retailer for home goods and furnishings. Prior to our initial investment, we watched Wayfair build its business. As customers increased, revenue per customer expanded, and the company grew year over year. Wayfair invested heavily in its logistics network to handle big and bulky furniture from freight forwarding all the way to last mile delivery. We believed this created a positive flywheel.
Wayfair became a more cost-effective distribution channel for suppliers, reduced delivery times to customers, and improved its customer shopping experience. Nonetheless, at the time, Wayfair did not produce free cash flow, and therefore it did not qualify for investment. During the pandemic, consumer behavior changed, and as a result, the company’s margins and free cash flow reached levels previously not expected for many years to come. We believed the competitive dynamics had changed for the long term in favor of Wayfair and the company qualified for investment.
We initially purchased Wayfair in the fourth quarter of 2020. Although we knew Wayfair would face difficult comparisons post-COVID, we believed the company would continue to generate free cash flow and its value would continue to be stable. The recent combination of persistently high levels of inflation, a possible recession, and the company’s commitment to continue investing heavily for future growth has resulted in negative free cash flow. We believe sustainable free cash flow is the key ingredient to long-term value stability and the company’s future free cash flow is in question. Therefore, we followed our discipline and sold Wayfair.”
2. Etsy, Inc. (NASDAQ:ETSY)
Number of Hedge Fund Holders: 29
Etsy, Inc. (NASDAQ:ETSY) operates two-sided online marketplaces that connect buyers and sellers. It is one of the premier ecommerce stocks to invest in. On October 14, Etsy revealed a new feature for its top sellers which are enrolled in Etsy Star Seller program, Live Chat Support, in which star sellers can now live chat with Etsy’s support team. Etsy, Inc. (NASDAQ:ETSY) also introduced a new Auto reply option in which sellers will be able to sell weekly schedules to send auto replies while offline.
On October 10, Goldman Sachs analyst Alexandra Steiger initiated coverage of Etsy, Inc. (NASDAQ:ETSY) stock with a Buy rating and a $130 price target, noting that ongoing macro headwinds had led the company to show a great level of resiliency.
At the end of the second quarter of 2022, 29 hedge funds in the database of Insider Monkey held stakes worth $595.9 million in Etsy, Inc. (NASDAQ:ETSY), compared to 43 in the preceding quarter worth $668.5 million.
In its Q2 2022 investor letter, Oakmark Funds, an asset management firm, highlighted a few stocks and Etsy, Inc. (NASDAQ:ETSY) was one of them. Here is what the fund said:
“We became interested in Etsy (NASDAQ:ETSY) when Josh Silverman took over as CEO in 2017. The company had long been recognized as a great marketplace, but prior management was not focused on maximizing shareholder value. In short order, Silverman transformed Etsy from a borderline non-profit into a higher-margin, faster-growing enterprise. The pandemic helped accelerate already strong fundamental business results as millions of new customers were introduced to the platform while stuck at home. But like so many other Covid-19 “winners,” Etsy has since fallen deeply out of favor with investors, which prompted us to take a closer look. Following a 75% decline in its stock price, the company now trades for 3.5x next year’s revenue or just a low double-digit multiple of operating profit using our estimate of normalized margins. We believe this is an attractive price to pay for a unique digital marketplace with a long runway for future growth. Note that our exposure to Etsy is currently established via options.”
1. IAA, Inc. (NYSE:IAA)
Number of Hedge Fund Holders: 36
IAA, Inc. (NYSE:IAA) operates a digital marketplace that connects vehicle buyers and sellers. It is one of the major ecommerce stocks to invest in. On September 7, IAA announced that it has expanded IAA Transport’s services footprint to include Mexico and Nigeria. Buyers from these countries can now generate real time quotes on any vehicle for sale or any vehicle purchased by the buyer.
On August 10, Baird analyst Craig Kennison maintained an Outperform rating on IAA, Inc. (NYSE:IAA) stock and lowered the price target to $46 from $50, noting that the company reported mixed results and narrowed guidance.
At the end of the second quarter of 2022, 36 hedge funds in the database of Insider Monkey held stakes worth $612.9 million in IAA, Inc. (NYSE:IAA), compared to 34 in the preceding quarter worth $663.9 million.
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