The holiday season is almost upon us, but holders of
may be celebrating early this year.
Shares in the e-tailer were up 7% in recent trading on Friday and have posted a 62% gain since last week, when the company
reported third-quarter results. Since it
debuted on the public markets in August, eCost's stock has surged more than 200%.
eCost has been riding the momentum of other stocks in the sector, particularly that of
, a couple of investors said. A number of e-commerce companies seem to have been boosted by the bullish comments made by
CEO Jeff Bezos earlier in the week, as well as the general sentiment that e-commerce as a whole will do well this holiday season, said James "Rev Shark" De Porre, a contributor to
. Bezos predicted that Amazon would have a record holiday season, according to published reports.
"Everything is flying. It's just one of those periods when folks are willing to chase things that have already moved big," said De Porre, who recently sold most of his shares of eCost, but retains a small long position in the stock.
Indeed, while eCost's stock has surged more than that of its peers, much of the sector has traded up in recent sessions. Shares of Overstock, for instance, have risen 30% since the company posted its third-quarter results late last month.
stock hit an all-time high on Friday and is up 19% since the online auction giant
posted its third-quarter earnings.
eCost's quarterly report helped ignite its shares, said one hedge fund manager, who asked not to be named. While the company's bottom line swung to a loss from a year-earlier profit, that was largely due to charges related to its IPO. Meanwhile, the company's revenue jumped 70% over the year-ago period.
"It was always cheap relative to
Overstock, so with a decent quarter -- and
Overstock running -- both together made the move," said the fund manager, who has no stake in eCost.
E-commerce stocks tend to do well during the fourth quarter. Like most consumer-oriented companies, e-tailers tend to get the bulk of their sales in the holiday period. But e-commerce companies have tended to post much faster-paced growth than their bricks-and-mortar brethren, leading investors to
expect blow-out holiday quarters.
But some analysts had
questioned how well e-commerce shares as a whole would perform this holiday season. Instead of all stocks in the sector rising, many projected that investors would have to pick and choose among the players.
Interestingly, despite Bezos' comments, Amazon's shares have been among the few that have performed poorly in recent sessions. Since the company
released its own third-quarter report, its shares are up a mere 1%. For the year, the company's stock is off 24%.
For its part, eCost has had its own skeptics. The company's main line of business is selling computer and consumer electronics business. That business, marked by tough competition and tight margins, has been the graveyard of a number of similar online retailers.
Critics of eCost have noted that the company's bottom line has deteriorated while its revenue has increased, a sign that it is getting marginal or negative returns on incremental sales. But boosters have faith that the company's management, which comes from the world of direct mail marketing, know how to grow the business profitably.
Still, some analysts think the stock's recent gains have little to do with how the company is actually performing.
"There is no fundamental explanation for it," said De Porre. "There is nothing specific. It's just riding the momentum wave."