Shoppers are eager to head back to brick-and-mortar stores, while inflation is stoking fears that consumers are pulling back their spending on some items to still afford the essentials.
That combination spells bad news for many e-commerce focused retailers, and their stocks tumbled amid a broader market selloff Thursday as investors feared their growth could be screeching to a halt and profits could be harder to come by.
Wayfair‘s stock dropped more than 20%, touching a fresh 52-week low, after the online furniture retailer reported bigger-than-expected losses in the first quarter along and logged fewer active customers.
Wayfair Chief Executive Officer Niraj Shah told analysts on a conference call Thursday morning that the “typical seasonal pattern of gradually building demand” that the business is used to tracking has been transpiring in a more “muted” fashion.
He also said he has noticed more shoppers are devoting a larger share of their wallets to non-discretionary categories and “reprioritizing experiences like travel.”
Read more: Surging prices force consumers to ask: Can I live without it?
Etsy shares tumbled 16% on the heels of the online marketplace issuing disappointing guidance for the second quarter. Shopify stock fell nearly 17% after it forecast that revenue growth would be lower in the first half of the year, as it navigates tough pandemic-era comparisons.
Poshmark, an online site for shopping secondhand, saw its shares fall about 15% around noon ET. Thursday. Shares of The RealReal and Farfetch fell around 12%, while those of Warby Parker, ThredUp, Peloton and Revolve each dropped about 10%.
“Investor appetite for high growth, negative EBITDA (and free cash flow) pandemic winners is very low,” Wells Fargo analyst Zachary Fadem said in a note to clients.
In a report issued Thursday morning, Mastercard SpendingPulse said total retail sales in the United States, excluding sales of autos, grew 7.2% from the prior year. Within that, e-commerce transactions dropped 1.8%, while in-store sales rose 10%, it said.
Gordon Haskett analyst Chuck Grom wrote in a note to clients that he continues to collect evidence that consumers are just beginning to push back on rising prices, “which will soon be a potential conundrum for the retail space.”
This story is developing. Please check back for updates.