Industry Overview - The Internet-Commerce space has seen significant growth since the pandemic, particularly among Gen-Z consumers who are accustomed to online shopping and high levels of digitization [1] - The evolution of Internet-Commerce is driven by advancements in user devices and sophisticated AI-enabled software platforms that enhance transaction capabilities and user satisfaction [2] Investment Opportunities - It is advisable to invest in Internet-Commerce stocks with a favorable Zacks Rank and strong growth potential, focusing on those with aggressive earnings or revenue growth [3] - Three Internet-Commerce stocks identified for strong growth potential through 2025 are Carvana Co. (CVNA), Tripadvisor Inc. (TRIP), and Groupon Inc. (GRPN), all carrying a Zacks Rank 2 (Buy) and a Growth Score of A or B [4] Company Insights: Carvana Co. (CVNA) - Carvana's acquisition of ADESA's U.S. operations has enhanced its logistics network, auction capabilities, and reconditioning processes, allowing for improved vehicle refurbishment [7] - CVNA anticipates year-over-year growth in retail unit sales for Q2 2025, holding only a 1% share of the fragmented U.S. automotive retail market, indicating substantial expansion potential [8] - The expected revenue and earnings growth rates for CVNA are 32.1% and over 100%, respectively, with an 8% improvement in the Zacks Consensus Estimate for current-year earnings over the last 30 days [9] Company Insights: Tripadvisor Inc. (TRIP) - Tripadvisor is experiencing growth in its marketplace businesses, particularly Viator and TheFork, with a focus on app enhancements and generative AI-driven travel booking experiences contributing to top-line growth [11] - The expected revenue and earnings growth rates for TRIP are 5.7% and 11.5%, respectively, with a 5.8% improvement in the Zacks Consensus Estimate for current-year earnings over the last 60 days [12] Company Insights: Groupon Inc. (GRPN) - Groupon is benefiting from strong growth in billings, particularly in the North American local category, driven by a successful hyper-local strategy [13] - The expected revenue and earnings growth rates for GRPN are 1.6% and over 100%, respectively, with a 20% improvement in the Zacks Consensus Estimate for current-year earnings over the last seven days [14]

Core Insights - Alibaba Group's shares have declined by 8.2% over the past month, underperforming both the Zacks Internet-Commerce industry and the Zacks Retail-Wholesale sector, indicating investor uncertainty despite advancements in its AI partnership with Apple [1][8]. Group 1: AI Partnership with Apple - Alibaba has released versions of its Qwen3 AI models compatible with Apple's MLX architecture, allowing integration with various Apple devices, which is a significant step towards introducing Apple Intelligence features in China [2][5]. - The partnership is strategically important as Apple's iPhone sales have surged, capturing the top position in China in May, with global sales increasing by 15% year-over-year in April and May [5]. - However, the collaboration faces scrutiny from U.S. officials, raising concerns about the integration of Alibaba's AI technology into iPhones sold in China, which could impact the partnership's timeline and implementation [6]. Group 2: Financial Performance - Alibaba's fourth-quarter fiscal 2025 results showed total revenues of RMB 236.5 billion, a 7% year-over-year growth, but this fell short of the Zacks Consensus Estimate by 1.49% [9]. - The adjusted EBITA grew by 36% year-over-year to RMB 32.6 billion, reflecting improvements in operational efficiency [9]. - The Taobao and Tmall Group reported a 12% year-over-year growth in customer management revenues, while the Cloud Intelligence Group saw an 18% year-over-year growth, with AI-related product revenues maintaining triple-digit growth for seven consecutive quarters [10]. Group 3: Regulatory Environment and Strategic Uncertainty - The regulatory landscape poses significant risks to Alibaba's growth, particularly concerning the Apple partnership, as U.S. resistance could limit potential revenue growth in the cloud segment [12]. - The Zacks Consensus Estimate for fiscal 2026 earnings has been revised downward by 1.5% over the past 60 days, indicating market pessimism regarding Alibaba's growth trajectory [11]. Group 4: Valuation and Competitive Landscape - Alibaba's stock trades at a forward P/E of 11.07X, significantly lower than the industry average of 22.29X, reflecting ongoing regulatory concerns and slower growth expectations [8][14]. - Despite recent declines, Alibaba's valuation metrics suggest it trades at a discount compared to global technology peers, which may present potential upside for patient investors [14]. - Competition in China's e-commerce and cloud markets is intensifying, with domestic rivals like JD.com and Pinduoduo, as well as international players like Microsoft and Amazon, posing challenges [17]. Group 5: Financial Position and Shareholder Value - Alibaba maintains a robust financial position with RMB 366.4 billion in net cash, providing flexibility for strategic investments and shareholder returns [18]. - During fiscal 2025, Alibaba repurchased $11.9 billion in shares and announced $4.6 billion in dividends, demonstrating a commitment to creating shareholder value [18].

Key Takeaways MELI is currently better positioned than JD to deliver stronger international e-commerce upside in 2025. MELI's buyer growth and logistics strength contrast with JD's rising costs and weak new segment profitability. MELI stock surged 53.1% YTD, while JD fell 6.5% amid earnings cuts and cautious sentiment on China's growth.MercadoLibre (MELI) and JD.com (JD) are two of the most prominent e-commerce companies operating outside the United States, with MELI leading in Latin America and JD comman ...

Core Insights - Carvana (CVNA) stock has reached a 52-week high of $312, gaining over 50% in 2025 and more than 800% over the last three years, outperforming peers like Amazon and MercadoLibre [1][2] - The company's end-to-end online business model covers all aspects of used-car retailing, and it is only 15% away from its all-time high of $370 reached in August 2021 [2] Financial Performance - Carvana's strong financial results are attributed to cost-cutting initiatives and debt restructuring, with total liabilities at $7.1 billion, below total assets of $8.87 billion [5] - In Q1, Carvana reported an EPS of $1.51, a significant improvement from an adjusted loss of $0.41 in the previous period, exceeding expectations of $0.75 by 101%. Q1 sales increased by 38% year-over-year to $4.23 billion, surpassing estimates of $4.04 billion [6] Growth Projections - Carvana is expected to increase total sales by 31% in fiscal 2025 and by another 25% in FY26, reaching $22.55 billion [7] - Annual earnings are projected to soar by 192% this year to $4.64 per share, compared to EPS of $1.59 in 2024, with FY26 EPS expected to rise another 33% to $6.16 [7] EPS Revisions - FY25 and FY26 EPS estimates have increased by 35% and 23% over the last 90 days, respectively, indicating a positive growth trajectory [10] - Current EPS estimates for FY25 and FY26 are $4.64 and $6.16, respectively, showing a consistent upward trend in earnings expectations [11] Valuation Insights - Carvana stock is trading at a premium with a forward P/E ratio of 65.5X, but positive EPS revisions are helping to balance the valuation [12] - The stock holds a Zacks Rank 1 (Strong Buy), suggesting potential for further upside [12]

Core Viewpoint - MercadoLibre (MELI) has shown strong performance in 2023, with a year-to-date return of 47.4%, significantly outperforming the Zacks Retail-Wholesale sector and the S&P 500 index [1][2]. Group 1: Financial Performance - Total revenues in Q1 2025 were driven by a 32.3% year-over-year growth in commerce revenues and a 43.3% growth in fintech revenues [3]. - Unique Active Buyers in the marketplace grew by 25%, while Monthly Active Users in fintech rose by 31% [3]. - The Zacks Consensus Estimate for Q2 2025 earnings is $11.70 per share, reflecting a 12.28% upward revision and an 11.64% year-over-year growth [8]. Group 2: Business Expansion - MercadoLibre launched the Mercado Play app on smart TVs, expanding its advertising reach to over 70 million devices and offering more than 15,000 hours of free content [6][7]. - This initiative is seen as beneficial for consumers, content studios, and Mercado Ads, enhancing ad inventory and reach [7]. Group 3: Valuation and Risks - MELI is trading at a premium with a forward 12-month Price/Sales ratio of 4.32, compared to the industry average of 2, indicating high growth expectations from investors [9]. - The company's credit portfolio profitability has declined, with Net Interest Margin After Losses (NIMAL) dropping to 22.7% from 31.5% year-over-year, attributed to increased reliance on lower-return credit card products [11][12]. - MercadoLibre faces intense competition from global players like Amazon, Walmart, and Alibaba, which could threaten its market share and pricing power [13][14]. Group 4: Strategic Outlook - Despite its leading position in Latin America, the company faces significant challenges that warrant a cautious outlook, particularly regarding profitability and competitive positioning [17][18].