We recently compiled a list of the 10 Best E-Commerce Stocks To Invest In. In this article, we are going to take a look at where Maplebear Inc. (NASDAQ:CART) stands against the other e-commerce stocks.
An Overview of the E-Commerce Industry
According to a report by Forbes, the e-commerce industry is expected to grow to a valuation of $7.9 trillion by 2027 from $6.3 trillion in 2024. In 2027, 23% of retail purchases are expected to be made online, up from 20.1% in 2024.
An increase in consumer confidence, after a period of sluggish growth, has been a key catalyst in improving the position of the e-commerce industry. On July 30, Reuters reported that the consumer confidence index, in the US, increased to 100.3 in July after it was revised down to 97.8 in June. Previously, experts predicted the index to fall to 99.7 after reaching 100.4 basis points. Chief Economist, Dana Peterson, suggested that while consumers remain resilient they are concerned over rising prices and interest rates. However, despite an uncertain macroeconomic environment, e-commerce companies are taking advantage of the current consumer sentiment by reducing prices. Companies like Target have also revised their profits for FY 2024 as lowered prices have drawn more customers.
To shed light on the state of online retail, US Mastercard Economics Institute Chief Economist, Michelle Meyer appeared in an interview on Yahoo Finance on August 16. Online retail sales went up by 8.2% in July, compared to a 2.9% growth rate in July 2023. She further explains that personal finances, time efficacy, and the overall state of the labor market impact which sites consumers choose to shop from. Meyer also added that in the past quarter, the average individual in the United States saw an appreciation in wealth, which has a positive bearing on consumer spending and therefore online retail.
What Does the Competitive E-Commerce Landscape look like?
The future of e-commerce is unpredictable. Bans on products from China, questions about cheap labor, criticism over fast fashion, and the increasing use of technology are different forces shaping the industry. In the first quarter of 2024, the US pushed to ban TikTok in the country, which mongered fear among Chinese e-commerce sites such as Shein and Temu. In April, law-making agencies in the US suggested a ban on Temu over labor rights infringement. Moreover, on August 21, Shein sued Temu over copyright infringements. The former suggested that Temu stole the company’s designs and trade secrets resulting in Temu losing money over every sale. Despite such, the founder of Temu, Colin Huang, stands as the wealthiest person in China with a net worth of $51.4 billion, as of August 22. You can also take a look at the best Chinese stocks to buy now.
On the other hand, e-commerce sites in the United States are trying to win against their competitors using advanced technology. Walmart, for instance, launched a generative AI search tool that customers can prompt and get a list of ideal products or items needed. For example, a customer who wants to throw a birthday party, but is unaware of the items needed, could use the search tool to save time. Similarly, Amazon launched Rufus, an AI shopping assistant, earlier this year. Rufus is capable of personally assisting a shopper and helping them find the right products. While we discuss technology, we cannot ignore eBay’s magical listing tool for sellers backed by artificial intelligence. The tool can analyze images, categories, and titles to curate product descriptions, prices, and shipping costs. You should also read our piece on the latest AI news and analyst ratings you should not miss.
As the e-commerce industry grows, it is crucial to know which companies are pioneering the race. You can also read our piece on the best advertising stocks to buy according to short sellers.
Our Methodology
To compile the list of the 10 best e-commerce stocks to invest in, we looked at holdings of e-commerce ETFs and screened for Internet Retail companies on the Finviz stock screener. We sorted our screen by market cap and looked at the 20 largest e-commerce companies. We picked stocks that were the most widely held by institutional investors, as of Q2 2024. The list is in ascending order of the number of hedge fund holders for each stock.
Note: All pricing data is as of August 22.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A retail store employee demonstrating the features of a video game console.
Maplebear Inc. (NASDAQ:CART)
Number of Hedge Fund Holders: 56
Maplebear Inc. (NASDAQ:CART), commonly referred to as Instacart, is one of the biggest online retail companies in the United States. The company was founded in 2012 and now serves households in the United States and Canada. Instacart has more than 1,500 retailers and over 85,000 stores, making up 85% of the grocery market in the United States.
Households from 14,000 cities across North America can choose from 1 billion products and grocery items shelved on Instacart. Not only does the platform have a huge product variety, but Instacart also boasts unbelievably fast delivery times. 25% of priority orders were delivered in 30 minutes or less. In the second quarter of 2024, the company logged $8.2 billion in gross transaction value, the average order value multiplied by the total transactions made, up by 10% year-over-year. During the same period, Instacart was used by more than 25 million people and overall orders increased by 7%, year-over-year, to reach 70.8 million.
Instacart is focused on expanding its offerings. In the second quarter of 2024, the company partnered with Uber Technologies to deliver food to households through the Instacart app. The company also launched e-commerce storefronts for 30 more retailers and powered websites for over 600 retail banners. Lastly, Maplebear Inc. (NASDAQ:CART) partnered with HVN Travel Group and PetSmart to offer a greater product variety to its customer base.
Maplebear Inc. (NASDAQ:CART) is positioned to report consistent financial results as it expects its gross transaction value to reach at most $8.25 billion in Q3 2024, exhibiting a year-over-year growth rate of 10%. The company attributes its GTV growth to growing orders, which is a consistent factor for its growth.
Analysts are bullish on CART and their 12-month median price target of $45 points to a 34% upside from current levels. Overall, 56 investors were bullish on the stock at the end of Q2 2024, with total stakes amounting to $2.08 billion. As of June 30, D1 Capital Partners was the largest shareholder with a position worth $929 million.
Overall CART ranks 9th on our list of the best e-commerce stocks to buy. While we acknowledge the potential of CART as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than CART but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
