Why Shares of Chewy, Wayfair, and Etsy Are Tumbling Today

What happened

Shares of Chewy (NYSE:CHWY), Wayfair (NYSE:W), and Etsy (NASDAQ:ETSY) took a big hit today after Pfizer announced that its potential coronavirus vaccine, which is still in the clinical trial stage, has been found to be more than 90% effective.

Chewy’s stock fell by 9.7%, Wayfair was down 16.5%, and Etsy slid 9.7% as of 11:57 a.m. EST.  

So what 

There are still a lot of unknowns about the potential vaccine, but Pfizer said this morning that it “was found to be more than 90% effective in preventing COVID-19 in participants without evidence of prior SARS-CoV-2 infection in the first interim efficacy analysis.”  

A red line graph descending on a dark background

Image source: Getty Images.

The company said that it will ask the U.S. Food and Drug Administration for emergency use authorization of the vaccine later this month. Pfizer added that it plans to produce 50 million vaccine doses by the end of this year and up to 1.3 billion in 2021. 

So why would this positive news about a potential coronavirus vaccine cause these stocks to fall so sharply? Because Chewy, Wayfair, and Etsy have seen their sales spike this year as more people have spent time at home ordering goods online. Investors are worried that if a COVID-19 vaccine is around the corner, it could curb e-commerce sales. 

As lockdowns spread across the U.S. earlier this year, consumers flocked to e-commerce stores to order office equipment, face masks, food and supplies for their pets, and other necessities. This lifted sales for these stocks, with revenue from the most recent quarter rising 47% for Chewy, 67% for Wayfair, and 128% for Etsy. 

This, in turn, has caused the stock of these three companies to skyrocket. Year to date, Etsy is up 198%, Wayfair’s shares have gained 178%, and Chewy’s stock has jumped 119%. But it appears that at least some investors are concerned that if Pfizer’s vaccine is approved and is eventually widely dispersed, consumers may return to physical stores again soon and rely less on these companies.

Now what 

It’s worth pointing out that the Pfizer trial vaccine hasn’t been approved for widespread usage yet and, even if it is, it could still take many months before most people have access to it. While some investors are fearing that these companies could suffer once physical stores open back up to full capacity and life returns to closer to normal, it’s likely that we’ll be well into 2021 before physical stores experience prepandemic levels of customers.

Additionally, investors would be wise to take notice of e-commerce’s larger growth trend, instead of focusing on daily coronavirus news. E-commerce sales accounted for just 11% of U.S. retail sales last year and now make up 16% of sales. Even before the pandemic, e-commerce sales were growing quickly as more retailers realized that they needed to reach consumers online, as well as in person. All of which means that, even with a coronavirus vaccine, it’s very unlikely that consumers will suddenly drop the convenience of online shopping.

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