Online retailers have done exceptionally well for themselves in 2020, and for obvious reasons. Why companies like Amazon tend to pop up in most investors’ minds when it comes to the online commerce world, more niche platforms have seen their stocks explode as well. Etsy (NASDAQ: ETSY) shot up to a record high on Wednesday following news of a strong financial quarter.
Etsy’s quarterly results were pretty impressive all around. Adjusted earnings came in at 75 cents per share, while total revenue for the quarter was $428.7 million. In comparison, Wall Street had expected revenues of just $329.8 million, completely exceeding expectations. In comparison to last year, sales are up just under 140% for Etsy, making it one of the fastest growing online retailers (if not the fastest) in the country.
“Our second quarter results demonstrate the scalability of our marketplace model,” said Rachel Glaser, Etsy, Inc. Chief Financial Officer. “Although it is early days, we are already seeing encouraging data points in customer retention, frequency, and growth in lifetime value that are a result of our product and marketing investments.”
When asked about what the future holds for the company, analysts had varying opinions, although most were positive. Rick Patel from Needham went on to say that mask demand is one particular area that is seeing plenty of growth right now, which should help Etsy. This influx of new users on the platform would also likely translate into more loyal, long-term buyers as well. This, in turn, should help accelerate the company’s already impressive revenue growth rates.
The only potential downside to the company right now for some investors is its pricey valuation. Etsy trades at extremely high ratios for the most part, such as price to earnings. While this is pretty standard for other, fast-growing companies, especially in comparison to Amazon, it might deter more long-term, value-focused investors.
Shares of Etsy shot up around 5% in after-hours trading. While not a lot in and of itself, it just adds onto an already excellent week and year for the company. Etsy is now up around 17% so far this week, while the stock has more than tripled since the start of the year, making it one of the best-performing stocks on the market so far. While there’s a growing sense of disease among lawmakers when it comes to large tech companies, something that bodes ill towards giants like Amazon, Etsy’s reputation as a more alternative, niche marketplace could bode very well for the stock in the future.
Etsy Company Profile
Etsy Inc is an American retailer of handmade goods, vintage items, and crafted goods. The business model is based on sellers listing products on Etsy’s platform. The product categories are clothing and accessories, jewelry, craft supplies and tools, wedding accessories and clothing, entertainment items, home and living, vintage items, and child and baby goods. Etsy’s revenue is categorized as: marketplace revenue, seller services, and other revenue. The marketplace consists of a platform where sellers can list their products in exchange of a fee paid to Etsy. – Warrior Trading News