Which Stocks Are Black Friday, Cyber Monday Winners & Losers?

Key Points

• Online sales rose 2.3% on Black Friday, for a total of $9.12 billion, according to Adobe Analytics.
• Cyber Monday sales came in ahead of most analysts’ expectations, coming in at $11.3 billion, up 5.8% over last year, although 2021 marked the first-ever Cyber Monday sales decline.
• Electronics sold big, and buy now, pay later is a growing trend.
• Some brick-and-mortar clothing retailers may not have been well situated to maximize holiday-season sales. 

Despite worries that higher inflation and lower consumer sentiment would slow Black Friday sales, companies such as Apple NASDAQ: AAPL, Microsoft NASDAQ: MSFT and Sony Group NYSE: SONY notched strong sales. 

Although consumers are tightening their belts as prices for food, fuel, and other basics are higher than a year ago, online sales rose 2.3% on Black Friday, for a total of $9.12 billion, according to Adobe Analytics.

Cyber Monday sales came in ahead of most analysts’ expectations, coming in at $11.3 billion, up 5.8% over last year, although 2021 marked the first-ever Cyber Monday sales decline. 

While companies such as Target NYSE: TGT lowered fourth-quarter guidance in anticipation of weaker holiday-season sales, and Amazon NASDAQ: AMZN issued a fourth-quarter revenue forecast that was lower than Wall Street’s expectations, consumers haven’t completely raised the white flag. 

Which retailers, or retail-related categories, were the Black Friday winners and losers? 

Electronics

Consumers were snapping up discounted phones, video game systems, digital cameras, and other electronic gear over the weekend and into Monday. An obvious shopping choice for these items is Best Buy NYSE: BBY, whose shares have skidded 16.60% year-to-date and 25.56% in the past year. Despite recent revenue and earnings declines, shareholders appear optimistic about the company’s future prospects.

Best Buy is up 20.10% in the past month and up 11.89% in the past three months. This year, earnings are seen declining by 35%, to $6.54 per share. Next year, though, Wall Street sees that reversing, with the company expected to post a net income gain of 5%.

Best Buy was up 1.05% mid-session Tuesday, as the broader market was trading lower. 

Meanwhile, Amazon’s Cyber Monday deals, which were still actively promoted on Tuesday, included electronic home security systems, image scanners, Amazon Echo smart-home systems and video gaming accessories. Amazon shares were down nearly 2% mid-session Tuesday. 

Buy Now, Pay Later

The concept of buying something and paying over time is nothing new, but the industry has evolved in recent years. Today’s version of buy now, pay later is a cross between credit cards and old-fashioned layaway. 

Today’s consumers have the option of breaking up their purchase costs into installments, which sometimes carry simple interest and sometimes no interest at all. In the latter case, of course, the payments themselves allow the lender to make money. BNPL is similar to a credit-card purchase, in that the buyer receives the good or service immediately, whereas with layaway, the purchase was only delivered upon completion of payments. 

Companies that offer BNPL include Affirm Holdings NASDAQ: AFRM, PayPal Holdings NASDAQ: PYPL and Block NYSE: SQ. 

For Black Friday and Cyber Monday, these companies have seen a booming business, according to retail analysts. That bodes well for future gains, as consumers continue to embrace that payment system. Affirm, which specializes in BNPL, has seen revenue grow at strong double-digit rates in the past eight quarters. Its three-year revenue growth rate is nearly 70%, although it’s yet to post a profit, which is not unusual for newly public companies operating in growth mode. 

Affirm shares are down 87.49 % year-to-date, and are also down on a one-month and three-month basis. 

Mixed Bag For Clothing Retailers

While it’s much easier to track online shopping in real time, analysts are also observing mall traffic to get insights into brick-and-mortar sales. Sometimes, analysts have to evaluate promotions and prior sales as a way of estimating how companies are performing, ahead of earnings.

In a recent research note, Morgan Stanley analyst Kimberly Greenberger cited strength among clothing retailers including Lululemon NASDAQ: LULU, Abercrombie & Fitch NYSE: ANF and American Eagle Outfitters NYSE: AEO. 

However, Morgan Stanley pointed out some retailers that may not be well positioned to make the most of holiday-season sales. Those “relative losers” include Gap NYSE: GPS. 

Gap was profitable in fiscal 2022, but Wall Street is expecting a loss of $0.05 per share for the current year, which is fiscal 2023. 

But online clothing retailers were also among companies slashing guidance for the current quarter. ThredUp NASDAQ: TDUP said earlier this month that it was lowering its full-year revenue guidance. The stock went public at $14 in March 2021 and has largely struggled since. Shares were trading at $1.27 late in Tuesday’s session.