Yahoo Finance’s Dan Roberts joins The Final Round to discuss why Wayfair’s stock is up 250% in the past year as people are focusing on home improvement and if the company can continue its growth into the next year.
MYLES UDLAND: We’ve spent so much time over the last couple of months kind of putting into buckets each of the outperforming trades, right? Jared talked about the reopening trades. We’ve got the hotels and the cruise lines and the airlines in there. Then you’ve got to stay-at-home trade, which tends to have, you know, your Zooms, your Pelotons in there.
But one stock that has more than doubled this year and I think fits into an interesting bucket– I’m not really sure if we have a full bucket for it– and that would be Wayfair. The stock is up better than 250%. I guess it’s sort of the home improvement bucket. Maybe a Home Depots and a Lowe’s goes with it. We saw those strong results from Williams-Sonoma the other night. RH is a stock that’s had a very nice year.
And Dan Roberts, you’ve looked at what has gone on with Wayfair this year. And is it really as simple as people are now stuck inside and said, hm, I would like this place to look a little bit better?
DAN ROBERTS: Well, so I think there’s some of the simplicity, Myles, of all the names that have had huge e-commerce gains. We’ve talked about it all week and last week, right? I mean, Best Buy, online sales are up 242%. Walmart, Target. Walmart was up 97%, Target, 195%. All of these big box, brick and mortar retailers are seeing their online sales surge, or they did in Q2. And that makes sense, and that’s sort of regardless of what they sell.
But then with Wayfair, there’s something happening in addition. And let’s remember, Wayfair, home goods is its bread and butter. It’s mostly furniture. There’s some other stuff. But it mostly falls under furniture. Now what was interesting was on the company’s Q2 earnings call, which was already almost a couple weeks ago, and yet the stock resurging this week thanks to a couple upgrades, maybe thanks to a share buyback program announced last week.
But on the Q2 earnings call, CEO Niraj Shah said that he thinks home goods were up in particular, you know, had a particular boost of any category, it really benefited. Because instead of going out and instead of doing trips, people were at home. And also, since they’re working from home, they looked around. And as you say, they said, well, I’m going to spiff up my place. I’m going to spiff up my setting here. Because now my home is my office.
Now that benefited Wayfair. But I think more than any of the other names, it also raises a potential red flag, right, which is, is this just a short lived thing? Is this a pandemic only bump? Because if you take him at his word that people were buying home goods because of the pandemic and because they’re stuck inside, well, is that trend going to continue next quarter? Is it going to continue a year from now?
And Wayfair mentioned on its earnings call, it had 5 million brand new customers at its website in Q2, 5 million more than in the last four quarters combined. That’s eye popping. But are those people going to stick around and come back? Or were they kind of one-time shoppers who thought, as you say, hm, I’ll try Wayfair because I need a new couch, a new rug, a new bookshelf, especially if I’m on Zoom calls with my colleagues.
So Wayfair kind of belonging in that bucket with all the e-commerce names, but also standing on its own because it’s really been a furniture play.
MYLES UDLAND: And also, of course, as you know, the subject of an internet conspiracy over the last couple of months, which is always exciting for any company.
DAN ROBERTS: Absolutely. And by the way, I mentioned in my story today as the kicker, but stock up 250%. One year ago this company was mostly in the news because of an employee walkout over a political protest. So how things have changed right now, at least for the stock.
MYLES UDLAND: Yeah. Certainly again, I think Wayfair is probably part of just a lot of companies that maybe we don’t spend enough time on kind of in the mainstream media here that have just been huge winners. Now many investors are going to be like, come on, you idiots, of course, you know, Wayfair is up this much. But we’ve got to talk about Tesla every day. So there’s only so much time for the Wayfairs of the world.