The e-commerce market soared last year as nationwide lockdowns and the fear of contracting coronavirus kept shoppers indoors. However, now that the economy is reopening on the back of accelerating vaccine rollouts, online platforms are seeing reduced traffic. This, along with investors’ rotation away from pandemic winners and toward cyclical stocks, could drive a further retreat by the weaker e-commerce players. As such, analysts have recently downgraded eBay Inc. (NASDAQ:EBAY) and Etsy, Inc. (NASDAQ:ETSY) because their near-term prospects look bleak. Let’s take a closer look.E-commerce platforms got a big boost from the COVID-19 pandemic. The public health crisis triggered the rapid digitization of commerce and trade. Nationwide shutdowns forced people to stay home and rely on online platforms for their shopping needs.
However, rapid progress on the vaccination front around the globe has led to much subdued performance by the online commerce sector so far this year. There are also rising fears of a post-pandemic slowdown of the e-commerce industry.
This, combined with investors’ rotation to cyclical stocks amid the economic recovery, could drive a greater pullback by fundamentally weak e-commerce stocks. Analysts have recently downgraded eBay Inc. (EBAY) and Etsy, Inc. (ETSY) given their bleak growth prospects. So, we think it could be wise to avoid these stocks now.