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Etsy has carved out a special niche in e-commerce by focusing on handmade or vintage items -- and business soared during the early stages of the pandemic.
The key components of Etsy business model is the Marketplace Platform: Etsy operates an online marketplace that allows sellers to list their handmade, vintage, and craft items for sale. The platform is designed to be user-friendly and offers a range of tools and resources to help sellers; market and manage their shops.
Like Amazon, Etsy has felt the impact of economic troubles. Consumers have less money to spend, especially on the discretionary sorts of items generally found on Etsy. Still, the company has managed to keep the growth it gained during the earlier stages of the pandemic when people favored buying online.
Etsy marketplace gross-merchandise sales last year totaled more than $11 billion. That's compared to $4.7 billion in 2019. This is a very good sign because it shows Etsy wasn't just a pandemic stock or a trend of the moment. Shoppers truly do see the value of choosing this e-commerce player.
In the most recent earnings report, Etsy said active buyers have climbed 95% over the past three years. And habitual buyers have increased 194% over the three years to 7.4 million. Habitual-buyer growth is particularly important because it shows Etsy has a solid base of shoppers it can rely on.
Etsy also has benefited from its cost control and its work to make every marketing dollar count. It's spending more on marketing than it did in previous years. But marketing spend as a percentage of revenue is on the decline.
As a result of all of this, Etsy in the most recent quarter reported record revenue; consolidated non-GAAP adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA); grew its free cash flow; and ended last year with $1.2 billion in cash.
Etsy's stock has been in the doldrums. It's lost 15% this year, leaving the stock trading for 24 times forward-earnings estimates. This looks very reasonable considering Etsy's performance through tough times and its ability to keep buyers coming back. At this point, any good news from Etsy could offer the stock a boost. And the company has the right strategy to keep the gains going over the long haul.
Etsy has carved out an interesting competitive niche. The company competitive strategy looks solid, the platform has remained sticky, with Etsy seeing its consolidated active buyer base swell to 95 million, roughly level with 2021 figures and more than double the firm's prepandemic active buyer base.
Etsy has benefited from moving its marketplace operations to the cloud, investing heavily in search-engine-optimization efforts, and tinkering with performance and brand marketing to boost engagement.
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Please note that the article should not be considered as investment advice or marketing, and it does not take into account the personal data and requirements of any individual. It is not a substitute for the reader's own judgment, and it should not be considered as advice or recommendation for buying or selling any securities or financial products.
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The Score performance whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. The results reflect performance of a strategy not historically offered to investors and does not represent returns that any investor actually attained.
The results reflect performance of a strategy not historically offered to investors and does not represent returns that any investor actually attained. The Readiness Indicators, Sentiment Indicators and total score are calculated by the retroactive application of a model constructed on the basis of historical data and based on assumptions integral to the model which may or may not be testable and are subject to losses. Active trading is generally not appropriate for someone of limited resources, limited invesment or trading experience, or low-risk tolerance. Your capital may be at risk.
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Disclaimer:
The Score performance whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. The results reflect performance of a strategy not historically offered to investors and does not represent returns that any investor actually attained.
The results reflect performance of a strategy not historically offered to investors and does not represent returns that any investor actually attained. The Readiness Indicators, Sentiment Indicators and total score are calculated by the retroactive application of a model constructed on the basis of historical data and based on assumptions integral to the model which may or may not be testable and are subject to losses. Active trading is generally not appropriate for someone of limited resources, limited invesment or trading experience, or low-risk tolerance. Your capital may be at risk.
Please note that no offer or solicitation to buy or sell securities, securities derivatives of future products of any kind, or any type of trading or invesment advise, recommendation or strategy, is made, given or endorsed by StocksRunner including any of their affiliates ("TS").
This information is provided for illustrative purposes only. You should not rely on any advice and/or information contained in this website and before making any investment decision. we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.
