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Online retailers accounted for 77% of the total MCap gain in 2020, says GlobalData

04 Feb 2021 (Last Updated February 5th, 2021 17:19)

Online retailers had experienced a remarkable year in 2020, witnessing a 65% increase in cumulative market capitalization (MCap) in 2020 over 2019, according to GlobalData, a leading data and analytics company.

Online retailers had experienced a remarkable year in 2020, witnessing a 65% increase in cumulative market capitalization (MCap) in 2020 over 2019, according to GlobalData, a leading data and analytics company.

GlobalData Business Fundamentals analyst Keshav Kumar Jha said: “Major online retailers such as Amazon, Alibaba, Pinduoduo, JD.com and eBay benefited from the increase in demand for e-commerce and contactless delivery services owing to the raging pandemic of COVID-19 the world over.

“The ability of these companies to capitalize on their distribution strength, and offer uninterrupted and timely service during the pandemic also helped them win investors’ confidence.”

Amazon touched the $1 trillion mark and recorded a significant 78.4% increase in MCap in 2020 over 2019. Increase in the number of people using e-commerce platform, and growth in its cloud business during 2020 led to the increase in MCap.

Chinese online major Alibaba also saw an increase in the number of active users on its e-commerce platform during the Covid-19 pandemic. However, the Ant Financial IPO fiasco and the alleged public criticism of Chinese regulators by Jack Ma dearly cost the firm and its MCap fell 21% in the fourth quarter of 2020.

Retailers including Walmart, Nike, Lowe’s, Fast Retailing, Target, and Dollar General posted over 20% YoY growth in MCap.

Jha added: “The strategy of these retailers to invest in multi-channel services kept investors interested in their stocks. They continued to invest in building their digital capabilities such as implementing digital-powered retailing supply chain and strengthening online offerings to respond to the pandemic-driven change in consumer and shopper behavior.”

Brazilian omnichannel retailer Magazine Luiza also featured into the top 25 retailers list with 60.2% increase in its YoY MCap.

Its stock increased riding on the back of strong e-commerce sales in the first three-quarters and its decision to bolster further its online offerings such as selling books.

With regard to valuation, 2020 was a disappointment for the US-based pharmacy retailers such as CVS Health and Walgreens Boots Alliance. These two firms reported YoY decline in MCap. Even though CVS Health posted net decline in MCap during 2020, investors seemed convinced about its strength in the prescription category and increase in diagnostic testing in the third quarter.

The tepid financial performance and increasing operational costs made investors wary about Walgreens Boots Alliance’s stock.

Jha concluded: “The rollout of Covid-19 vaccines is expected to lead to economic recovery; however, challenges to vaccine procurement and its efficacy remain, which lead to uncertainty. A successful vaccination drive could ease the social distancing norm by allaying people’s fears and helping retailers gain growth momentum in the months ahead.”