Since then all eCommerce players and Fintech companies have reported and ALL of the earnings reports and CV19 commentary have been about as clear cut as can be.
There is a complete secular shift going on from offline to online and whilst there may be a recession in traditional industry and businesses and in particular traditional retail, “new retail” and eCommerce and the online transaction ecosystem have experienced a substantial uplift. There is nothing patchy about this.
So we’ve had: Shopify, Mercadolibre, eBay (having been previously left for dead) surprise with Q1 results and/or guide to the upside with “surging” CV-19 demand.
Afterpay, Paypal, Square, Visa and Mastercard (as well as Tencent) all beating and providing positive forecasts.
All recessions have been slightly different in their complexion but generally recessions have hit the traditional, mature and dying industries the hardest. This economic crisis is being felt the hardest in offline traditional retail however online retailing and online transactions are actually thriving.
Clearly the winners in our CV19 crisis are:
eCommerce and fin-tech
Stay at home entertainment (online gaming, connected TV etc)
Remote working infrastructure (TC/VC, network infrastructure, collaboration providers and cyber security)
It is not lost on me that day 1 of lockdown I have:
Made an online purchase of running shoes and started running for the first time (outside of a gym)
Started watching TV for the first time in 10 years
Spent more than half my working day on the phone (VC and TC)
Started doing group VCs for personal/social connectivity
Gone back to cooking at home after pretty much eating out for every meal bar breakfast for the last 10 years
If you are wanting a CV-19 perfect storm play then you could consider SEA Holdings (SE)
SEA is a combination of eCommerce, online gaming and fintech!
Q1 results were a beat on the top line…
Total adjusted revenue was US$913.9 million, up 57.9% year-on-year from US$578.8 million for the first quarter of 2019.
Total gross profit was US$206.8 million, up 424.1% year-on-year from US$39.5 million for the first quarter of 2019.
Total adjusted EBITDA was US$(69.9) million compared to US$(32.0) million for the first quarter of 2019.
Specifically their eCommerce revenues accelerated from 64.8% to 74.3% YoY growth rate Q4 to Q1.
This is what they had to say about CV-19 and their performance… “The coronavirus crisis is driving a step change in the growth of the digital economy globally, materially accelerating a shift to online lifestyles that is broad, deep, and, in our view, irreversible. We believe that Sea, as a market leader in some of the key sectors of the digital economy, is gaining and will continue to gain a disproportionate share of the resulting growth in our markets. Like all businesses, Sea has been stress-tested by the crisis. Our robust performance through the first quarter and beyond, as we responded to surges in user demands and navigated significant disruption, underlines the fundamental strength, resilience, and adaptability of our business. We believe this will, in the long run, enable us to capture the further accelerated and expanded growth opportunities presented to all of our core businesses across our markets.”
I keep looking at SE but I am worried it’s another GREE or DeNA. Both platforms were huge in Japan about 10 years ago. They had a massive runup, blew all the cash on overseas expansion, and then went into a long decline.
Maybe SE is a lot closer to Tencent? I like that they have a commerce platform in addition to entertainment. But I just don’t know.
As though this secular trend needs no further evidencing…
US ecommerce penetration leapt from 16% to 27% during the crisis more than 10 years of gains in 8 weeks apparently - according to BoA, ShawSpring Research and US Department of Commerce.
Scroll down to a b&w line chart posted by Kiwi trader.
Shopify clearly experienced it as they referred to fulfilling 10 years of eCommerce progress in 90 days at their recent “Shopify Reunite” event and announcements of new products/services…
The global pandemic has accelerated nearly a decade of ecommerce evolution into ninety days. And just as businesses around the world have pivoted to adapt to the new climate, we at Shopify Plus have scrapped our normal plans and timelines to immediately solve the problems businesses face today.
We’ve been hard at work filling the gap that a decades’ worth of progress would have had on commerce, shipping innovative new products and updates faster than we’ve ever shipped.
(FWIW I was particularly impressed with what they announced and rolled out this year. They are extending their solution set (and moat). Shopify have dreamt big and succeeded at everything they have set out to achieve. Until that track record changes, I don’t see any reason to doubt the success of their latest developments).
That eCommerce progress has to be good news for Shopify, Mercadolibre, Square, Wix, SEA, Amazon etc.