Due to the COVID-19 pandemic and its impact on the global economy, the S&P 500 careened to a first-quarter loss of 16.61%, one of its worst quarterly performances in decades, but there are some green shoots in the market.
Notably, the ProShares Online Retail ETF (NYSEArca: ONLN) was half as bad as the S&P 500 in the first three months of the year, confirming the notion that some e-commerce stocks are proving somewhat resilient in the coronavirus environment.
ONLN seeks investment results, before fees and expenses, that track the performance of the ProShares Online Retail Index. The index tracks retailers that principally sell online or through other non-store channels. The index uses a modified market-capitalization weighted approach, is rebalanced monthly and is reconstituted annually.
“U.S. e-commerce activity recently spiked 25% from earlier in March, as Americans hunkered down in the face of the rapid spread of the coronavirus, new data from Adobe shows,” reports Eric Savitz for Barron’s.
Broad-Based Approach
At the end of last year, ONLN allocated over 36% of its weight to Amazon (NASDAQ: AMZN) and Alibaba (NYSE: BABA), giving the fund substantial exposure to the world’s two largest e-commerce markets. As a play on coronavirus buying trends, ONLN is equally as valid.
The Adobe report notes online sales of consumer staples items, including cleaners, toilet paper, and hand sanitizer, spiked in January and February. In March, computer and office equipment sales online increased as more Americans were forced to work from home because of the virus.
Those numbers could move more quickly to the upside because the COVID-19 pandemic is forcing a slew of malls and retail store closures across the world. In the U.S., many non-essential retailers are temporarily closed and while traditional grocery stores remain open, many shoppers are opting to order from home and not risk contracting the coronavirus by venturing outside.
“The computers category, for instance, didn’t really see an increase until mid-March, while groceries experienced their boost in early February, and products like hand sanitizers were spiking as early as late January…so in order to profile the magnitude of the growth swing and consumer buying behavior, we’ve had to set measurement periods, during the time that they occurred, so that we don’t miss their growth trajectory and/or mischaracterize the impact in demand,” according to Adobe by way of Barron’s.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.