E-commerce stocks rising ahead of Black Friday

Millions of US shoppers will be hitting online stores for post-Thanksgiving discounts this weekend, which is going to be put e-commerce sites under the spotlight.

Black Friday discount vouchers
Source: Bloomberg

With the increasing hints of recovery with the US economy, there are expectations that this year will be one of the best holiday seasons for retailers in years.

Falling unemployment, rising wages, and lower gas prices will have helped raise household budgets and consumer sentiment.

Just earlier this month, e-commerce giant Alibaba reported more than $9 billion in sales on  Singles' Day in China. The shopping day on Tuesday 11 November is similar to Cyber Monday where heavily discounted goods are offered online.

In the week prior to the event,  shopping action was taking place on the stock market as investors snapped shares of Chinese e-commerce companies such as Alibaba, JD.com, and Vipshop. Alibaba’s stock price climbed over 16%, JD.com saw an 8% rise, while Vipshop was up 7%.

As traders sold on the news, it was not a surprise to see a pullback in stock prices for many of these companies. For example, Alibaba dropped 3.87% on Tuesday 11 November after six-straight days of gains.

Matching Singles’ Day?

Not just limited to US companies, Black Friday/Cyber Monday weekend will once again be another excuse for global e-commerce sites to hawk discounted deals. We’re seeing some similar patterns from Singles’ Day emerging in the US and China e-commerce stocks.

Alibaba and Amazon are among companies with share prices edging up over the past week. This suggests a similar momentum building up as we head into the event, and a possible ‘sell on the news’ effect.

This is likely to present a sell opportunity for short-term traders on the day of the event. Conversely, longer-term investors bullish on the e-commerce sector can watch out for a pullback to support levels for an entry.

Alibaba chart
Click to enlarge

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