Watch These Second-Hand, Refurbished Stocks That Rocked In Q2 As Customer Trends Shift

Global consumer spending growth exhibited some resilience in the second quarter of 2024.

However, the latest PMI data shows a deceleration in the rate of expansion in the output of consumer-oriented sectors. For example, the U.S. recorded a decline in manufacturing activity for the fourth consecutive month in July, hitting an eight-month low.

Amid sticky inflation and elevated interest rates, consumers are turning to the pre-owned and refurbished goods market. Affordability is a factor driving this trend, as second-hand and refurbished items often come at a fraction of the cost of new ones.

There’s also the secular shift in consumer behavior towards choosing sustainable alternatives.

The pre-owned and refurbished goods market has grown steadily in recent years. It surged from a niche segment to a mainstream consumer choice.

The rise of this market aligns with the principles of a circular economy. This model aims to minimize waste and maximize resource efficiency by recycling and reusing existing products. Second-hand markets play a crucial role in extending the lifespan of products and reducing the demand for new materials.

Here's a look at how some of the key players performed during the second quarter.

EBay

• E-commerce website eBay Inc EBAY reported second-quarter net revenues and non-GAAP earnings of $2.57 billion and $1.18 per share, respectively. That’s significantly higher than consensus estimates.
• EBay’s 2024 Recommerce Report shows that “pre-loved” and refurbished goods make up around 40% of the company's GMV (gross merchandise volume).
• GAAP operating margins expanded to 21.3%, from 20.4% in the year-ago quarter. Non-GAAP operating margins improved to 27.9%, from 26.9% for the same quarter last year.
• EBay also added refurbished golf clubs and now offers warranty services for pre-owned clubs and has eased its returns policies.
• To trigger more sales of second-hand apparel, eBay had added new Gen AI features, such as “Shop the Look” and “Explore”.  The company, in partnership with privately-owned Certilogo, has introduced a new “Click to Resale” feature, making it easier for sellers to list their second-hand items.

ATRenew

• ATRenew Inc RERE reported net revenues of RMB 3.78 billion ($519.7 million), up 27.4% year-on-year. Non-GAAP operating income surged to RMB 94.1 million ($12.9 million), from RMB 52.0 million in the year-ago quarter.
• The company recorded 8.4 million units of products transacted, compared to 7.7 million in the second quarter of last year. The GMV (gross merchandise volume) of its multi-category recycling service business grew by nearly 400% year-over-year.
• ATRenew renewed its exclusive partnership with JD.com Inc JD in the second quarter. Through this collaboration, the company generated significant growth in its recycling transaction order amount. During the June 18 (618) shopping festival, trading volumes of refurbished electronic products grew by a whopping 100% year-over-year.
• The company has been expanding its services to meet the diverse recycling needs of consumers, including luxury goods and digital products. "We are confident that our unique circular economy business model positions us well for healthy long-term growth,” CEO Kerry Xuefeng Chen said during the earnings call.

LKQ Corp

• LKQ Corp LKQ reported revenue of $3.7 billion, representing 8% year-on-year growth. However, adjusted net income contracted by 10.4% to $261 million, from $291 million in the year-ago quarter, amid a challenging macro.
• The company recorded operating cash flows of $213 million and free cash flows of $133 million. LKQ Corp repurchased $125 million worth of shares during the second quarter.
• LKQ has been given a Buy or Outperform rating by 7 analysts that cover the stock, including analysts at Baird, Roth MKM, and Barrington Research. The consensus price target of these 7 analysts is $62.43.

PDD Holdings

• PDD Holdings Inc PDD owns online marketplace Temu, which has an extensive section on used and refurbished items. PDD Holdings is scheduled to report its second-quarter results on August 26.
• The second-hand market is booming, and the trend is expected to continue, driven by shifting consumer behavior towards sustainability and affordability. The U.S. recommerce market (the market for buying and selling pre-owned goods) is projected to grow from an estimated $188 billion in 2023 to $276 billion by 2028.
• Investors will continue to watch the stocks of eBay, ATRenew, and LKQ Corp, as these companies are positioned to drive growth in the market for refurbished goods.

Price Action: 

• Shares of eBay have climbed almost 30% year to date
• ATRenew's stock has jumped almost 45% during the same period.
• LKQ Corp's stock is down 13% year to date, it gained almost 5% over the past week.
• Shares of PDD Holdings have added nearly 9% over the past month.

Now Read:

• August Services Growth Exceeds Expectations As Manufacturing Slumps: Inflation Gradually Eases ‘To Normal Levels’

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