A few decades back, the notion of purchasing commodities in anything but a store might have seemed ridiculous. However, as the world adapts itself to newer forms of technology, e-commerce websites are slowly beginning to replace traditional brick-and-mortar establishments as a whole. The concept of online shopping has taken the world by storm, catching the attention of prospective investors as well.
The internet is a massive place, and a whole array of e-commerce companies are listed on the stock market today. This makes investing in the right company a tricky task, as a number of different factors have to be looked into before any final decision can be made. The Alibaba IPO raised nearly $25 billion in the Hong Kong Stock Exchange, and is proof of the massive potential that the e-commerce sector offers at present. During such times, if you do choose to invest in e-commerce stocks, it is essential that keep yourself informed of the nitty-gritties involved.
The Possibilities Are Endless
People from all over world are slowly subscribing to online shopping; from basic commodities like food products and clothing to expensive goods such as designer watches and smartphones, the internet has become a place where almost anything can be purchased. Some of the oldest names in the e-commerce sector, such as Amazon and eBay, have shown how e-commerce companies can rapidly expand beyond boundaries to become thriving multinationals. Although Amazon stock has been underperforming in recent times, it has still been given optimistic buy ratings by many analysts.
In fact, Amazon had recently announced its plans of using futuristic drones for making swift deliveries. Flipkart, an Indian e-commerce company, was recently valued at $10 billion after consecutive rounds of funding; this e-commerce company has recently announced its plans to make its debut on the New York Stock Exchange. Such an announcement can mean both good news as well as bad for prospective investors. While American investors can readily get a slice of the apple, they also have to deal with the fact that Flipkart is a relatively young company. Going public makes it more difficult for Flipkart to grow in the direction that it chooses to as an organization; but, it also provides the essential funding that the company is after.
When Alibaba went public in 2014, it received widespread media coverage from all over the world. Many eager investors jumped on the Alibaba bandwagon, and expected to make a killing; but, almost six months later, not many can claim to have done so. Due to high market expectations, Alibaba stock dropped nearly 15% in value recently when the company disclosed its earnings. Although, the company’s earnings grew by 40% to around $4.2 billion in the fourth quarter of 2014, they were still lower than the consensus market estimate of $4.5 billion. Like Alibaba, as new e-commerce websites prepare to go public, it is imperative to take into account previous e-commerce case studies to glean the most that you can.
Making the right investment is not just about the stocks that you buy or sell; the time that you choose to buy or sell those stocks is just as important.