Ecommerce stocks plummet as consumers withdraw online spending

The Etsy website

Gabby Jones | Bloomberg | Getty Images

Shoppers are eager to return to brick-and-mortar stores, as inflation fuels fears that consumers are pulling back on certain items to still afford the essentials.

This combination represents bad news for many ecommerce-focused retailers, and their shares have plummeted a wider market sell-off On Thursday, as investors feared their growth might stop abruptly and profits might be harder to come by.

WayfairThe stock fell more than 20%, hitting a new low of 52 weeks later the online furniture retailer reported greater-than-expected losses in the first quarter and registered fewer active customers.

Wayfair chief executive Niraj Shah told analysts in a Thursday morning conference call that the “typical seasonal pattern of gradual growth in demand” that the company is accustomed to monitoring has been more “muted”.

He also said he noticed that more shoppers are dedicating a larger share of their portfolios to non-discretionary categories and “re-prioritizing experiences like travel.”

Read more: Rising prices are forcing consumers to ask themselves: Can I do without it?

Etsy shares plunged 16% in the wake of the online market which issued disappointing guidance for the second quarter. Shopify shares fell nearly 17% after it predict that revenue growth would be lower in the first half of the year, as she navigates the difficult confrontation of the pandemic era.

Poshmark, an online second-hand shopping site, saw its shares drop roughly 15% around noon ET. Thursday. Actions of The real real Other Farfetch fell by about 12%, while those of Warby Parker, Discussion, group Other revolver each fell by about 10%.

“Investors’ appetite for the winners of the high growth pandemic, negative EBITDA (and free cash flow) is very low,” Wells Fargo analyst Zachary Fadem said in a note to clients.

In a report released Thursday morning, Mastercard SpendingPulse said that total retail sales in the United States, excluding auto sales, were up 7.2% from the previous year. Within that, ecommerce transactions fell by 1.8%, while in-store sales increased by 10%.

Gordon Haskett analyst Chuck Grom wrote in a note to customers that continues to gather evidence that consumers are just starting to reject the price hike, “which will soon be a potential conundrum for the retail space.”

This story is developing. Please check back for updates.