Record Online Holiday Spending Driven By Deep Discounts And 'Buy Now, Pay Later' Deals
Portfolio Pulse from Neil Dennis
Online spending during the 2023 holiday season reached a record $222.1 billion, up 4.9% from the previous year, driven by deep discounts and 'buy now, pay later' deals. The Vanguard Consumer Discretionary ETF (VCR) saw a 22.8% gain during this period but has since dropped 3.5% in early 2024. Electronics, apparel, and furniture were top categories, with Microsoft's Xbox and sports apparel like sneakers being popular items. 'Buy now, pay later' contributed $16.6 billion in holiday spend, but credit card delinquencies are rising, with Goldman Sachs predicting normalization by 2025. American Express, Capital One, and Ally Financial were highlighted as top picks in the consumer finance sector.
January 04, 2024 | 5:29 pm
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NEGATIVE IMPACT
VCR gained 22.8% during the holiday season but has dropped 3.5% in early 2024, potentially due to concerns over rising credit card delinquencies and payment defaults.
The drop in VCR's price may be attributed to the broader market's reaction to concerns over credit card delinquencies and the sustainability of consumer spending, particularly as 'buy now, pay later' schemes could face higher defaults.
CONFIDENCE 80
IMPORTANCE 70
RELEVANCE 80
NEUTRAL IMPACT
Amazon, included in VCR, may be impacted by the record online spending during the holidays, but also by the potential tightening of consumer credit affecting future sales.
While Amazon likely benefited from the increased holiday spending, the rising credit card delinquencies and potential tightening of consumer credit could impact future sales and consumer spending behavior.
CONFIDENCE 75
IMPORTANCE 60
RELEVANCE 70
POSITIVE IMPACT
Ally Financial, one of Goldman Sachs's top picks, may see a positive short-term impact despite concerns over credit card delinquencies.
Ally Financial's recognition as a top pick suggests that it is well-positioned to handle the current credit environment, which could lead to investor confidence and a positive short-term impact on its stock.
CONFIDENCE 85
IMPORTANCE 75
RELEVANCE 80
POSITIVE IMPACT
American Express is highlighted as a top pick in the consumer finance sector by Goldman Sachs, despite rising credit card delinquencies.
American Express's position as a top pick by Goldman Sachs suggests confidence in its ability to manage credit risks and maintain profitability, which could positively influence its stock in the short term.
CONFIDENCE 85
IMPORTANCE 75
RELEVANCE 80
POSITIVE IMPACT
Capital One Financial Corporation, recommended by Goldman Sachs, may benefit in the short term despite the sector facing higher delinquencies.
Capital One's inclusion in Goldman Sachs's top picks indicates a positive outlook for the company's stock, as it is expected to navigate the challenges in the credit market effectively.
CONFIDENCE 85
IMPORTANCE 75
RELEVANCE 80
POSITIVE IMPACT
Microsoft's Xbox was among the most popular items in the electronics category, which could positively impact MSFT's short-term performance.
The popularity of Microsoft's Xbox during the holiday season is likely to have a positive impact on the company's short-term revenue and could reflect positively on its stock price.
CONFIDENCE 80
IMPORTANCE 65
RELEVANCE 70
POSITIVE IMPACT
Nike, as a popular sports apparel brand during the holiday season, may see a positive short-term impact from the increased spending in the apparel category.
Nike's presence in the popular apparel category, with high consumer spending and deep discounts, could lead to a positive short-term impact on its stock as holiday sales are reflected in earnings.
CONFIDENCE 75
IMPORTANCE 60
RELEVANCE 60