Saying that momentum has swung the wrong way for Canadian grocery retailer Empire Company Limited (TSX:EMP.A) may be a bit of an understatement.
Shares of the retailer dropped nearly 5% on Friday as investors began to weigh how the potential long-term impact of e-commerce on the grocery retail industry in Canada would play out for companies such as Empire - Empire is the parent company of Canadian grocery chains Sobeys and Foodland.
The impetus for the 5% drop in Empire's share price was the announcement that Amazon.com, Inc. (NASDAQ:AMZN) would in fact be rolling out grocery deliveries in Vancouver starting in November and Toronto starting in the New Year, timelines which were much faster than analyst expectations up to this point.
It appears that the e-commerce company's integration of its Whole Foods Market (NASDAQ:WFM) acquisition is one which has been prioritized by the tech giant, a fact which has scared many investors off from the once-sought after grocery retail business.
With momentum now in reverse for companies such as Empire, investors looking to profit from this reality may now be choosing to put their trades in reverse; by shorting or using options to gain downside exposure to a potential decline, investors betting on a long-term slide for Empire and the industry as a whole stand to benefit over the coming quarters as the e-commerce roll-out continues.
For now, I remain on the sidelines, watching this situation closely.
Invest wisely, my friends.
