Amazon And Alibaba Rivalry Will Intensify Regulatory And Market Headwinds

Key Takeaways

• Intensifying competition, regulatory pressures, and heavy investment needs threaten profitability, market share, and the stability of earnings and margins.
  
• Macroeconomic volatility and a shift to alternative e-commerce models risk shrinking transaction volumes and undermine long-term revenue growth.
  
• Expanding service offerings, logistics investments, and strategic alliances are boosting diversification, customer retention, and profitability, while the Kaspi acquisition unlocks synergy potential for future growth.

Catalysts

D-Market Elektronik Hizmetler ve Ticaret A.S.

• As global competitors like Amazon and Alibaba intensify their presence in Turkey and other emerging markets, D-Market is likely to experience sustained pressure on market share, which will drive up customer acquisition costs and ultimately compress both revenue growth and net margins.
  
• The industry-wide shift toward direct-to-consumer and brand-owned ecommerce platforms threatens to undermine the relevance of D-Market's marketplace model, creating a long-term risk of declining transaction volumes and shrinking topline revenue.
  
• Ongoing macroeconomic instability and chronic lira depreciation in Turkey could make GMV and earnings highly volatile, exposing D-Market to unpredictable swings in reported revenue and consistently challenging the company's ability to achieve stable net income growth.
  
• Rising regulatory scrutiny around data privacy, digital taxation, and cross-border commerce is likely to increase D-Market's compliance costs and operational complexity, directly pressuring profitability and potentially limiting future expansion across both domestic and international markets.
  
• Escalating investment requirements in logistics, last-mile delivery infrastructure, and technology are at risk of outpacing GMV growth, creating persistent free cash flow strain and jeopardizing D-Market's ability to both self-fund growth initiatives and defend already thin EBITDA margins.

D-Market Elektronik Hizmetler ve Ticaret Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more pessimistic perspective on D-Market Elektronik Hizmetler ve Ticaret compared to the consensus, based on a Fair Value that aligns with the bearish cohort of analysts.
• The bearish analysts are assuming D-Market Elektronik Hizmetler ve Ticaret's revenue will grow by 29.7% annually over the next 3 years.
• The bearish analysts assume that profit margins will increase from -3.4% today to 5.7% in 3 years time.
• The bearish analysts expect earnings to reach TRY 7.3 billion (and earnings per share of TRY 7.29) by about August 2028, up from TRY -2.0 billion today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bearish analyst cohort, the company would need to trade at a PE ratio of 7.9x on those 2028 earnings, up from -18.8x today. This future PE is lower than the current PE for the US Multiline Retail industry at 20.6x.
• Analysts expect the number of shares outstanding to decline by 1.71% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 15.6%, as per the Simply Wall St company report.

D-Market Elektronik Hizmetler ve Ticaret Future Earnings Per Share Growth

Risks

• D-Market demonstrated strong real GMV growth of 12.1 percent and notable improvements in gross contribution and EBITDA margins in 2024, suggesting the company is successfully scaling while improving profitability which could support higher earnings and thus a rising share price.
  
• The company is experiencing rapid growth in value-added services such as lending volumes, advertising services, and premium subscriptions, with lending volume reaching 2.6 times that of the previous year and other revenue categories (including advertising and premium fees) growing by over 100 percent, helping diversify revenue streams and raise overall revenue resilience over the long term.
  
• D-Market's investments in proprietary logistics, such as HepsiJet, are driving a larger share of parcel deliveries with increased off-platform activity (up 89 percent year-over-year), which reinforces brand strength, customer loyalty, and may lead to sustainable improvements in net margins.
  
• Strategic partnerships and product innovation, like expanding their loyalty program and integrating Hepsipay's payment solution across more merchants, are fostering higher customer retention and order frequency, which could increase recurring revenue and improve long-term profitability.
  
• The recent acquisition of a 65.4 percent controlling stake by Kaspi, a leading fintech and e-commerce platform, signals the potential for operational synergies, technology sharing, and financial backing, enhancing D-Market's ability to invest in growth initiatives and improve net income over the coming years.

Valuation

• The assumed bearish price target for D-Market Elektronik Hizmetler ve Ticaret is TRY2.97, which represents the lowest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of D-Market Elektronik Hizmetler ve Ticaret's future earnings growth, profit margins and other risk factors from analysts on the more bearish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of TRY4.63, and the most bearish reporting a price target of just TRY2.97.
  
• In order for you to agree with the bearish analysts, you'd need to believe that by 2028, revenues will be TRY128.5 billion, earnings will come to TRY7.3 billion, and it would be trading on a PE ratio of 7.9x, assuming you use a discount rate of 15.6%.
  
• Given the current share price of TRY2.85, the bearish analyst price target of TRY2.97 is 4.0% higher. The relatively low difference between the current share price and the analyst bearish price target indicates that they believe on average, the company is fairly priced.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.