Amazon deepens gloom for battered e-commerce stocks

The historic rout in Amazon’s shares last week highlights how difficult the environment has become for e-commerce stocks after their pandemic-driven boom, with investors set for another rollercoaster in coming days.

The historic rout in Amazon.com Inc.’s shares last week highlights how difficult the environment has become for e-commerce stocks after their pandemic-driven boom, with investors set for another rollercoaster in coming days.

Etsy Inc., Wayfair Inc. and Shopify Inc. are hurtling toward earnings reports this week in the shadow of Amazon’s worst selloff since 2006. The tech giant triggered the rout with a weaker-than-expected revenue forecast, adding to evidence of slowing e-commerce growth.

“It’s a canary in the coal mine,” said Oktay Kavrak, a director and product strategist at Leverage Shares. “If Amazon is hitting a speed bump, other names could crash. People were expecting a slowdown in growth following the pandemic, but I don’t think they expected as drastic a drop as we saw.”

The blazing rally e-commerce stocks saw at the height of COVID-19 lockdowns in 2020 has reversed as consumers returned to their pre-pandemic habits and inflation cooled their spending. Amazon executives said they were watching for whether shoppers will trim their purchases to offset rising prices as fuel and labor costs bite.

Etsy has slumped 57 per cent this year, making it the third-worst performer on the S&P 500 Index, while Wayfair has tumbled 60 per cent. Shopify just posted its worst month on record -- it’s the biggest loser on Canada’s S&P/TSX Composite Index this year, wiping out more than US$151 billion in market value.