Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your experience. Save up to 40% More details

ETFs & Stocks To Win/Lose On SCOTUS Sales Tax Decision

By Zacks Investment ResearchStock MarketsJun 22, 2018 04:17AM ET
ETFs & Stocks To Win/Lose On SCOTUS Sales Tax Decision
By Zacks Investment Research   |  Jun 22, 2018 04:17AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items

The online retail stocks were hit hard on Jun 21, 2018 on the ruling of the supreme court of the United States (SCOTUS) on sales tax. The 5-4 ruling permits states to collect sales taxes from online and out-of-state retailers. The latest decision reverses a 1992 Supreme Court ruling that prohibited the practice.

Justice Anthony Kennedy noted that the reason for the upturn in the previous ruling was the radical change in online retail industry. The 1992 ruling was mainly concerned about the mail-order business worth $180 billion.

But now the online retail industry has ballooned. "Last year, e-commerce retail sales alone were estimated at $453.5 billion,” he mentioned. This along with traditional remote sellers amounted to more than half a trillion dollars.

Below we highlight a few ETF and stock winners and losers following the Supreme tax ruling.

Brick-and Mortar Retailers: A Clear Winner

Brick-and Mortar retailers became the most-expected winners. Companies like Walmart Inc. (NYSE:WMT) (up 0.7%) and Kohl's Corporation (NYSE:KSS) (up 1.14%) thus gained on Jun 21. The broader retail ETF VanEck Vectors Retail ETF (V:RTH) added about 0.24% on that day.

Online Retailers: An Obvious Loser

Online retail ETFs like Amplify Online Retail ETF IBUY (down 1.4%) and ProShares Long Online/Short Stores ETF CLIX (down 2.3%) slid on Jun 21, to reflect the Supreme Court ruling.

Amazon: A Surprising Long-Term Winner

Though online retail behemoth Inc. (NASDAQ:AMZN) lost more than 1.1% on Jun 21, experts do not foresee the company to suffer from the ruling. This is because “Amazon already collects sales tax on the products it sells directly.” Since this makes up about half of all units sold on its site, the court ruling should not have much impact on Amazon.

However, the rest of the products are sold by third-party merchants on Amazon's marketplace and “the ruling doesn't make clear how third-party sales should be taxed,” per a law professor at the University of Arizona, as quoted on CNBC. Even Moody's analyst Charlie O'Shea believes that whether higher taxes on those smaller retailers’ goods will at all affect Amazon's overall revenues is still unclear.

Moreover, companies such as Amazon and eBay Inc. (NASDAQ:EBAY) (down 3.25% on Jun 21) have wide international exposure, which should cushion them from U.S. State taxes. So, investors can have faith on Amazon-heavy ETFs like Consumer Discret Sel Sect SPDR ETF (V:XLY) (read: May's Retail Sales Growth Highest in 6 Months: ETFs & Stocks).

Small Online Retailers Likely to be Hard-Hit

Smaller online retailers with concentrated exposure to the U.S. market are likely to be knocked-down the most. Notably, online retailer Inc. (NASDAQ:OSTK) shed a solid 7.2% on Jun 21. The company generates sales mainly from the United States.

Consumers May Feel the Pinch

Overall, if taxes are hiked, companies may choose to pass that burden on to consumers. So, consumers’ shopping bills could see a jump ahead. iShares US Consumer Services ETF IYC should thus be on investors’ radar.

Want key ETF info delivered straight to your inbox?

Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>, Inc. (AMZN): Free Stock Analysis Report

eBay Inc. (EBAY): Free Stock Analysis Report, Inc. (OSTK): Free Stock Analysis Report

VANECK-RETAIL (RTH): ETF Research Reports

SPDR-CONS DISCR (XLY): ETF Research Reports

AMPL-ONLN RETL (IBUY): ETF Research Reports

ISHARS-US CN CY (IYC): ETF Research Reports

Walmart Inc. (WMT): Free Stock Analysis Report

Kohl's Corporation (KSS): Free Stock Analysis Report

PRO-L ONL/S STR (CLIX): ETF Research Reports

Original post

Zacks Investment Research

ETFs & Stocks To Win/Lose On SCOTUS Sales Tax Decision

Related Articles

ETFs & Stocks To Win/Lose On SCOTUS Sales Tax Decision

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email