Amazon is Causing These Types of Stocks to Lose Popularity

In general, people may be enjoying the stock market right now because there is an amazing upward trend happening in the markets.

However, when you shift the focus onto individual stocks, the viewpoints on some types of are not so bright – with the retail industry being perhaps the most obvious example.

The Most Hated Stocks

It hasn’t always been this way. However, in the current market, there is a lot of money being used to bet against this classification of stock, with money pouring in from both hedge funds and other investors.

This information came out in the past few weeks through a report that was published by Bespoke Investment Group. The report outlines the specific stocks that are getting the short end of the sales stick by the most money. They called this list “the most hated stocks in the world” because they are doing so poorly.

This sort of thing happens when shares of a stock are borrowed from a broker by an investor. They turn around and sell them with the idea that they would be able to purchase them again at a lower price, and then give them back to the broker so they can make a profit.

Death By Amazon

With these stocks, there are some that are more sought after than others. According to Bespoke Investment Group, these are the stocks that are suffering from something they refer to as death by Amazon. They are part of the multiline retail stock group which is a group of department stores, owner and operators of these store, and those that offer a diverse amount of general merchandise to their customers.

When you take a look at the amount of stocks from this group that are being short sold, the number is astonishing. On average, in the S&P index, almost a quarter of the shares of stocks in this group are available for a short sale. That alone may not say much about the trend, but when you look at the percentages from half a year ago, it is almost double. In this group, JC Penny and Nordstrom are at the top of this list with stocks available for short sale.

How Amazon Impacts These Stocks

So how does this relate to Amazon? Well, the e-commerce giant is having a huge impact on these types of retailers and their stocks. Amazon is holding its own in terms of market performance, and the gap in sales between brick and mortar stores such as JC Penny and Nordstrom has been extensive.

Over the past year, this gap has grown even wider. More people are interested in making purchases online than ever before, and it is only increasing with each passing month. This is dealing a hard blow to the foot traffic stores and malls all over the country. Online shopping, such as that offered by Amazon, is simply too attractive and convenient. Even though Amazon stock prices are not where estimates had them at this time, they are still steadily increasing while prices for other retail stores are declining.

There is still a lot that can happen over the next few months and years. How these stocks act depends highly on how Amazon handles its business going forward. This is where a major market shift can happen. If these businesses want to continue to compete with big fish in the market such as Amazon, they need to get creative. Just because a stock is being short sold does not mean that it will continue to go down.

One thing is for sure, however. Amazon is showing no signs of slowing down in the long term, and if nothing changes in the market, it will continue to get better.

Ethan Warrick
Wealth Authority