• The cumulative market capitalization (MCap) of the top 25 retailers increased by $321bn in Q2 2021
• Regulatory crackdown led to broad-based selloff of Chinese retailers’ stocks

The MCap of US-based online retailers, such as Amazon and eBay rebounded in Q2 2021, whereas major Chinese e-commerce players, such as Alibaba, Pinduoduo and JD.com, struggled to retain their market valuation amidst the regulatory crackdown in China, according to GlobalData, a leading data and analytics company.

Keshav Kumar Jha, Business Fundamentals Analyst at GlobalData, comments: “Amazon rebounded from a 4.7% decline in MCap in Q1 2021 to add more than $175bn in Q2. The company’s improved financial performance, with growth of more than 40% in revenue and 220% in its net earnings in Q1 FY2021, over that in Q1 of FY2020, enabled Amazon to regain investors’ confidence.

The performance of Pinduoduo’s and JD.com’s stocks remained lacklustre despite a continuous increase in the number of active users on their respective platforms and the growth in earnings.

Jha continues: “Pinduoduo’s founder and Chairman Colin Huang’s abrupt exit in March, combined with the government’s scrutiny and regulatory crackdown on the entity in China remained a cause for concern.

“Even an impressive performance, including an increase of 239% in Q1 FY2021 over that in the same quarter of FY2020 and a 49% increase in the number of average monthly active users, failed to prevent the continued decline in Pinduoduo’s MCap.”

The regulatory crackdown also impacted JD.com and Alibaba, with both companies’ stocks losing their shine. JD.com’s shares dropped approximately 25% on June 30, 2021, from its 52-week high of $106.9 on Feb 17.

After a record listing on NYSE in March 2021, Coupang failed to sustain its momentum. The increase in its net loss in Q1 2021 over that in the previous year’s quarter led to the company selling off its stocks.

Kering, Target, NIKE, Seven & i, and adidas recorded over 15% quarter-on-quarter (QoQ) increase in their MCap. These stocks appeared to have regained investors’ confidence, with all five companies reporting a growth in their market segments and an improvement in their financial performance during Q2 ending June 30, 2021.

Meanwhile, investors remained bullish on CVS Health, with its impressive quarterly performance and the company’s plans to offer more healthcare services at its stores.

Despite reporting strong earnings in recent quarters, Walgreens Boots Alliance recorded over 4% decline in its MCap. Increasing competition in the pharmacy area and rising interest rates kept investors bearish on its stocks. The company’s stock fell 4% on May 26 once the news of Amazon’s plans to enter brick-and-mortar pharmacy stores surfaced. Walgreens’ shares also shed 4% on June 18 on Fed’s indication of the interest rates being raised in the future.