As the Q2 earnings season for online marketplace stocks comes to a close, let’s take a closer look at the best and worst performers of this quarter, including Cars.com (NYSE:CARS) and its competitors.
Marketplaces have been around for centuries. They used to be physical locations like main streets or malls, where sellers benefited from being in close proximity to one another, attracting customers with convenience and a wide range of products. Today, online marketplaces fulfill the same role by bringing together large customer bases, which attracts sellers who are willing to pay commissions. This creates a scaling effect that leads to further customer acquisition.
The 11 online marketplace stocks we track reported weaker Q2 results. On average, their revenues missed analyst estimates by 0.54%, and their revenue guidance for the next quarter was 1.72% below consensus. With rising interest rates causing investors to prioritize profits over growth, there has been a rush out of high-valuation technology stocks, and online marketplace stocks have not been immune. On average, their share prices have declined by 13.9% since the previous earnings results.
Cars.com (NYSE:CARS)
Originally launched as a joint venture involving media companies such as The Washington Post and The New York Times, Cars.com (NYSE:CARS) is an online marketplace that connects buyers and sellers of new and used cars.
In Q2, Cars.com reported revenues of $168.2 million, a 3.26% increase compared to the previous year. However, this fell short of analyst expectations by 0.53%. The company experienced slow revenue growth and a decline in its user base. Although the revenue guidance for the next quarter exceeded Wall Street analysts’ expectations, the adjusted EBITDA guidance was lower.
“We delivered solid results in the second quarter and garnered positive dealer reception and adoption of our Preferred and Premium Packages and digital solutions,” said Alex Vetter, Chief Executive Officer of Cars.com.
Since the earnings results, the stock has dropped by 14.6% and currently trades at $19.14.
Is now the time to buy Cars.com? Read our full report on Cars.com here.
Best Q2: MercadoLibre (NASDAQ:MELI)
MercadoLibre (NASDAQ:MELI), originally an online auction platform, has evolved into a one-stop e-commerce marketplace in Latin America.
In Q2, MercadoLibre reported revenues of $3.42 billion, a 31.5% increase compared to the previous year. The company exceeded analyst expectations by 4.4%. It was a very strong quarter for MercadoLibre, with impressive growth in its user base and a significant beat of analysts’ revenue estimates.
MercadoLibre outperformed its peers, achieving the highest analyst estimates beat and fastest revenue growth. The company reported 109 million daily active users, a 29.8% increase compared to the previous year. Since the earnings results, the stock has risen by 18.1% and currently trades at $1,383.42.
Is now the time to buy MercadoLibre? Access our full analysis of the earnings results here, it’s free.
Weakest Q2: Sea (NYSE:SE)
Started as a gaming platform in 2009 and becoming a publicly-traded company in 2017, Sea Limited (NYSE:SE) now offers a range of services including e-commerce, digital payments, and financial services in Southeast Asia.
In Q2, Sea reported revenues of $3.1 billion, a 5.2% increase compared to the previous year, but falling short of analyst expectations by 4.68%. It was a weak quarter for the company, with a decline in its user base and a miss in revenue estimates.
Since the earnings results, the stock has dropped by 29.2% and currently trades at $40.2.
Read our full analysis of Sea’s results here.
LegalZoom (NASDAQ:LZ)
LegalZoom (NASDAQ:LZ) is an online platform that provides legal services to individuals and small businesses. It was created by its co-founders who struggled to find affordable legal assistance when starting a business, prompting them to start LegalZoom.
In Q2, LegalZoom reported revenues of $168.9 million, a 3.04% increase compared to the previous year. The company beat analyst expectations by 1.1%. It was a mixed quarter for LegalZoom, with revenue surpassing Wall Street’s expectations by a small margin, but weak revenue growth. Furthermore, while the revenue guidance for the next quarter was in line with expectations, the adjusted EBITDA guidance was below.
The company reported 1.55 million users, an 11.4% increase compared to the previous year. Since the earnings results, the stock has declined by 36.7% and currently trades at $9.71.
Read our full, actionable report on LegalZoom here, it’s free.
Shutterstock (NYSE:SSTK)
Originally a platform featuring the photos of founder Jon Oringer, Shutterstock (NYSE:SSTK) has grown into a digital platform where customers can license and use a vast collection of content.
In Q2, Shutterstock reported revenues of $208.8 million, remaining flat compared to the previous year, and missing analyst expectations by 2.6%. It was a mixed quarter for the company, with full-year revenue guidance exceeding Wall Street’s expectations, but weak revenue growth. Additionally, the company’s gross margin also deteriorated.
Shutterstock had the highest full-year guidance raise among its peers. The company reported 0.56 million users, a 51.1% increase compared to the previous year. Since the earnings results, the stock has dropped by 19.4% and currently trades at $41.5.
Read our full, actionable report on Shutterstock here, it’s free.
The author has no position in any of the stocks mentioned.
