The e-commerce industry has become a huge one. It has grown at an impressive rate despite its late-20th-century origins. Grand View Research predicts an annual compound growth rate of 11% until 2030. If the forecast holds, the global industry size will reach $5.4 trillion.
Many of the biggest companies are still growing despite the rise e-commerce Conglomerates have evolved into companies that encompass many different businesses. These three companies, even though they have a lot of potential in e-commerce, will probably get most of their revenue from other segments.
1. Amazon
Consumers and investors alike are likely to see Amazon (NASDAQ: AMZN) As an online retailer. It makes some sense, since the largest part of online revenue comes from sales. Conglomerate is the name of the company.
Amazon’s finances suggest that the online market could grow. Los leader. The company’s revenue comes from other sources, such as the sale of ads, subscription services, (such as Amazon Prime), or services for online sellers.
Investors should also not overlook its cloud computing division, Amazon Web Services. Amazon Web Services (AWS) accounted for just 16% of Amazon’s net sales by 2023. However, due to its higher margins it contributed most of Amazon’s operating income.
In 2023, Amazon’s net sales totaled 575 billion dollars, an increase of 12% over the previous year. Amazon has returned to profitability thanks to a slower increase in its operating costs. In 2023, it earned $30 billion net profit. In 2022, it lost $3 billion.
In the midst of this recovery, the share price has increased by about 80% in the past year. Its 63 P/E ratio is near the historical lows. The stock is expected to continue to deliver significant returns as its smaller companies drive relatively rapid profits growth.
2. MercadoLibre
Latin American leader in e-commerce MercadoLibre (NASDAQ: MELI) To succeed, the company has always had to be innovative. In 1999, online sales presented a problem to customers who paid with cash.
The company created MercadoPago in order to provide financial services which facilitate purchases. This segment was so successful that the company offered its services to customers and businesses outside of MercadoLibre.
Mercado Envios, a company that specializes in order fulfillment and shipping, has taken this innovation to the next level. It was able to ship and package goods, and bring one-day or two-day deliveries to previously unreachable areas. MercadoLibre, too, makes money from advertising.
MercadoLibre, a combination of these businesses, and their synergies, generated over $14 billion in revenues in 2023. This is a 38 percent increase from the previous year.
During that time, the company’s net profit grew to $987 millions, which is more than twice as much as it was in 2022, when $482 million were reported.
The stock has only grown by 8% in the past year, despite recent challenges arising from a tax bill, growth of lower margin first-party purchases, and declining shipping revenues.
The P/E of 72, however, is still near historic lows, and it compares favorably to Amazon, its U.S. competitor. Stocks are likely to move higher as MercadoLibre continues to benefit from synergies within its own region and moves past the tax liabilities.
3. Sea Limited
Sea Limited (NYSE: SE) The company was one of the best performers during the bull market in 2021, but missteps, and bad luck, like so many other tech stocks at that time, took their toll during the bear market.
Shopee, its e-commerce division, dealt with the failure of market entry into Europe and Latin America. A ban was also imposed on the Garena gaming segment. Free Fire Investors lost interest in the stock after India. Shares are now down around 85% since their high in 2021.
Investors were given some reason to be hopeful during the last earnings conference call. The company is focusing on building up a logistic infrastructure within its own markets in Southeast Asia. This should help it to maintain its lead in these markets.
Garena has also developed an updated version. Free Fire This version addresses security concerns raised by the prior version. This increases the chances that it’ll return to India. The market has 1.4 billion inhabitants.
Garena’s recovery may be key to increasing revenue, which is calculated under GAAP. GAAP revenues are expected to grow 5% to $13 billion in 2023. Garena’s recovery could be crucial to boosting revenue under generally accepted accounting principles (GAAP), which grew 5% in 2023 to $13 billion.
Garena has struggled, but its net profit was $163m, which is the first time it’s made a profit in a publicly traded company. Sea Limited’s stock, despite its yearly losses, has increased by over 30% since 2024.
The forward P/E of 34, which is a ratio that reflects the company’s rapid growth in profits, could attract investors as it begins to recover. This will eventually help it reach its all-time highest levels from 2021 onwards.
Why should you invest in Amazon now?
Consider these factors before you purchase Amazon stock:
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John Mackey is a former CEO at Whole Foods Market (an Amazon subsidiary) and he’s a board member for The Motley Fool. Will Healy Has positions in MercadoLibre, and Sea Limited. The Motley fool has Amazon, MercadoLibre and Sea Limited as recommendations and holds positions. The Motley Fool owns shares of Sea Limited, MercadoLibre and Amazon. Disclosure policy.
The 3 top E-commerce stocks are no-brainer buys but not for the reasons you think The Motley Fool originally published this article