Stock Market Making Bets on Commerce’s Omnichannel Future 

Thus far into 2022, the stock market seems to be weighing in, heavily, on the great digital shift.

Reading the tea leaves, and the performance of shares in companies as varied as Block, PayPal, LendingClub, Shopify, et al, implies that maybe the pivot has not been as all-encompassing as had been assumed. But one wonders if investors have effectively been shooting first, and will ask questions later.

We won’t go into a company-by-company litany of stock performance to back those claims. But many of these digital-first and digital-only players have seen their shares cut by 40% or more through these first few weeks of 2022.

By way of contrast, Walmart is trading at a recent quote of $139, down 3% on the year; Mastercard is up about a percent, Visa about the same.

The takeaways here are that the firms with at least some foothold in the realm of physical commerce are likely to have an easier time of it than the purely digital players. Keep in mind that we’re only using share price performance as a proxy for sentiment. Each company has its own particular challenges and opportunities, revenue and earnings trajectories.

But slowing growth, for companies that had put up spectacular growth during the pandemic, is and has been punished swiftly on the Street. In just one instance, Shopify has said its revenue growth should slow below previous rates of 57% (the company’s shares are down more than 40% YTD).

But if Visa and Mastercard (and a big box retailer like Walmart, where same store food comp gains were in the high single-digit percentage points) are relatively buoyant — and they are — it’s a telling sign that investors are rewarding the companies that are more firmly omnichannel. PYMNTS’ own data show that 80% of consumers prefer to buy groceries and pharmaceuticals in-store.

The payment networks, it might be said, are the pick and shovel merchants, especially able to ride the wave of transactions wherever they occur.

The current pressure — perhaps we might say over-correction — on the FinTech space seems to assume that eCommerce is all but dead. But of course we know that this is not true. A shift of activity from online channels to face-to-face interactions may be a temporary headwind for the firms that are looking to bring flexible POS, buy now, pay later (BNPL)  and a more online-like experience to the tangible brick-and-mortar stage — and still post strong operational metrics (revenues and earnings) in the meantime. And against that backdrop, the Street’s harsh judgement of recent earnings reports may seem overreaction.