Heading into a second ‘COVID winter’, the worst of the virus has been successfully over, and new vaccines and drug treatments promise to mitigate the damage ahead. About the economic and market changes we have to live through.
The retail sector has been severely impacted by the COVID-19 crisis, and its impact will continue to a large extent. The number of customers in brick-and-mortar stores declined, and sales shifted significantly to e-commerce. The dominance of online retail was predicted. COVID took it years ago.
But the real change brought about by the shift from retail to the online space is in the metrics. Sales remain important, but website traffic plays an ever more important role in determining a retailer’s health. Strong website traffic has been shown to correlate, on average, with a retailer’s stock price. This is equivalent to visiting a physical store. Every site visit marks another potential customer and another potential product sale. Building a critical mass of site visitors has become an important activity for retailers.
With this in mind, website traffic screener, based on SEMrush data, starts looking at the relationship between site visits and stock prices. Traffic Screener shows you the top trending sites, sites that are losing traffic. For individual stocks, you can use the traffic tool to show how your website traffic aligns with the stock price. Data can be compared quarter-to-quarter or year-to-year, giving investors different ways to look at stocks.
So let’s check out some internet stocks using our new traffic screener and analyst commentary.
Let’s start with Coupang, a South Korean e-commerce company. Coupang is rapidly becoming a leader in the Korean online retail sector. Think Amazon. However, it has a Korean twist. Coupang’s total revenue in 2019 was his $5.9 billion, and in 2020, the “year of the pandemic,” he more than doubled to his $12 billion.
Coupang’s site sells almost everything. Customers can find everything they would normally find in different places, such as auto essentials, baby items, home furnishings, kitchen items, and pet supplies, and Coupang puts them all in one place. Through its Rocket Delivery network, the company guarantees fast, same-day or next-day delivery of over 5 million discreet items, depending on the customer’s choice.
Earlier this year in March, Coupang held an IPO for the US market. The CPNG ticker began trading on Wall Street on March 11th. In his second quarterly announcement as a publicly traded company, his Coupang in 2Q21 reported his $4.5 billion in top line, up more than 7% from the first quarter.
That’s what traditional metrics tell us. Looking at CPNG’s website traffic, we see an increase in the number of visits to Coupang’s site. The company recorded 82.6 million unique visitors in the second quarter. That number increased 23% in the third quarter to 101.3 million. Even more impressive is the 650% increase in Q3 numbers from $13.5 million in the same period last year.
In a Deutsche Bank report, analyst Peter Milliken says retail is recovering in South Korea, with Coupang leading the way.
“Koreans are returning to stores, and retail sales growth reached a more than four-year high in the second quarter, growing 8.1% year-on-year. Online shopping still grew three times that rate. And Coupang grew almost three times faster than online growth, which we believe shows how the penetration of the category has grown,” commented Milliken.
To this end, Milliken rates the stock as a buy with a price target of $44 suggesting up to 60% upside potential over the next year. (To see Milliken’s achievements, click here)
Overall, Coupang has recently recorded 4 analyst reviews, 2 bought and 2 pending, with a moderate buy consensus rating. The stock is selling at $27.33, with an average price target of $38.67 implying a 41% gain over 12 months. (See his CPNG stock analysis on TipRanks)
Far Fetch (FTCH)
The second is Farfetch, an online retail platform that specializes in luxury goods and brands. The company embodies the cross-border, international nature of the Internet. Founded in Portugal, the company is headquartered in London with offices in Brazil, Shanghai, Tokyo, Los Angeles and New York. Farfetch connects sellers and buyers across the world of high-end fashion and boutique retail.
Farfetch was profitable in both the first and second quarters of this year, after suffering heavy losses in 2020 when COVID decimated consumer activity around the world. In the first quarter, his bottom line was $1.44 a share, but in the second quarter he slipped to 24 cents. Earnings moved in the opposite direction from his $485 million in the first quarter to his $523 million in the second quarter. The second quarter top line was also up 43% year-over-year.
When it comes to Farfetch’s website traffic, it’s also worth noting the company’s customer base. Farfetch has over 3 million active customer accounts and operates in 190 countries. Unique visits increased 12.2% from 35.4 million in Q2 to 39.7 million in Q3, up nearly 11% from $35.9 million in the same period last year, according to traffic data.
Wells Fargo analyst Ike Boruchow wrote of Farfetch: Works very efficiently. We’re looking for a structural winner with momentum as we move into the mid-cycle, and with FTCH we’re making sure the unusual ecomm name is actually achieving profitability this year. “
Unsurprisingly, Boruchow rates the stock as overweight (i.e. buy), and his $55 price target suggests up to 46% more room to grow in the coming months. . (To see Boruchow’s achievements, click here)
Wells Fargo’s view is bullish here, and the company isn’t alone. Of his 9 recent reviews on the stock, 7 are buys and 1 is hold and sell, giving the stock a medium buy consensus rating. With a stock price of $37.27 and an average price target of $55.78, FTCH has a 49% upside potential in his one-year period. (See his FTCH stock analysis on TipRanks)
To find listed companies with trending websites (that is, the top websites with the highest increase in website traffic over the past month), visit TipRanks. website traffic screener.
Disclaimer: The opinions expressed in this article are those of the featured analyst only. This content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.