Goldman picks 4 stocks to play a $5 trillion e-commerce opportunity — including one with 70% upside

Published Mon, Apr 17 20238:44 PM EDT

E-commerce growth may have slowed post-pandemic, but Goldman Sachs remains bullish on the sector and thinks there is more growth ahead. "We believe that e-commerce will continue to benefit from secular growth tailwinds and see global e-commerce sales of $3.4 trillion (2022E) growing at a [compounded annual growth rate] of 9% through 2026E to reach $4.8 trillion," Goldman's analysts, led by Eric Sheridan, wrote in the investment bank's "2023 Global E-commerce Handbook" on Apr. 10. Stocks to play it Goldman has named a number of e-commerce stock picks, including three that made the bank's global conviction list — a compilation of the bank's top buy-rated picks. Singapore-based tech giant Sea is one of Goldman's favorites in the space. The bank has a price target of $140 on the stock, representing potential upside of about 67% to the stock's closing price of around $84 on Friday. It is also on Goldman's global conviction list. Alibaba is another of Goldman's top picks. The bank has a $136 price target on the firm's Hong Kong-listed shares, which implies a 43% potential upside to the stock's closing price of around $95 on Friday. The Chinese tech giant is also on Goldman's global conviction list. The third e-commerce stock making the highly-coveted list is South Korean e-commerce firm Coupang . The SoftBank -backed firm is South Korea's largest online retailer and has a presence in several key markets in Asia, although the firm announced in March that it had shuttered its operations in Japan. The exit came less than two years after it entered the market. Amazon is also among Goldman's favorite e-commerce stocks. The bank has ascribed a price target of $145 on Amazon, representing potential upside of 42%. State of e-commerce The e-commerce sector is dominated by just five players, according to Goldman, representing over 60% of global online sales in 2022. It named Amazon and Alibaba as the largest e-commerce platforms globally, with about 20% market share apiece. Pinduoduo , JD.com , and eBay round off Goldman's list. Goldman also said China was the world's largest e-commerce market, with an estimated $1.5 trillion in e-commerce sales in 2022, or about 43% of total sales globally. The e-commerce market grew in 2020 as consumers stayed home during pandemic lockdowns. Goldman estimates that global e-commerce penetration jumped by about 6 percentage points in 2020, double the growth rate of the pre-pandemic era. But the sector saw a "steep deceleration" in penetration in 2022 as pandemic restrictions ease. "Going forward, while we expect the retail market to continue to show such correlation, we forecast a gradual normalization in the pace of online penetration from 2023," Goldman said. Nevertheless, the bank continues to see challenges for the sector, particularly in the macro landscape. "Investor sentiment around e-commerce has broadly deteriorated in recent periods, with concerns around slowing growth rates and increased volatility in global consumer spending trends," the bank added. — CNBC's Michael Bloom contributed to reporting