Should you buy shares in ETSY?
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Etsy is an online e-commerce platform where creators of arts and crafts, vintage items and other unique goods go to sell their products.
2019 was a massive year for ETSY in which they achieved a record revenue of $818.4 million dollars & close to $5 billion in gross merchandise sales.
However, this global pandemic has caused a decrease in demand by it’s consumers as many cut back on unnecessary spending.
Is ETSY stock doomed? Or could this be the next amazon of the Arts & crafts market?
In this video, we’re going to find out! I’m going to analyse the stock, deep dive it’s the businesses long term growth plans and inform you whether I have PERSONALLY PURCHASED shares in ETSY.
LETS DIVE IN!
Is ETSY special?
The ETSY platform has a real community which connects 2.7 million active sellers with 46.4 million active buyers.
People buy from ETSY because of the vast selection of unique items available of which many can even be tailored to fit your needs!
With 88% of buyers indicating the goods can’t be purchased anywhere else!
How does ETSY make money?
Over 70% of ETSY’s revenue comes from seller fees for listing items & payments.
The rest of their revenue comes from extra value-added services such as advertising or discounted shipping labels.
ETSY’s revenue increased by over 35% in 2019 & management were optimistic about reached $1 billion!
How big is the Unique Retail market?
ETSY estimated the market size for it’s unique hobby craft items to be $100 billion per year!
Which could grow to $170 billion by 2023.
So with $5 billion in gross product sales, they believe there is plenty of room to growth & scale!
How does ETSY Plan to grow?
At an ETSY investor event back in 2019, ETSY discussed three ways they could drive major growth.
The first growth lever they could pull would be to INCREASE THE NUMBER OF ACTIVE BUYERS.
Via Improved Social Media Marketing, SEO and even TV ads!
The initial results looking positive with active buyers growing by 17.5%
The second growth lever they can pull is to retarget previous ETSY customers who only one purchase per year.
With automated emails & special events designed to entice these past customers to purchase again.
The third growth leader they can pull is to increase the average order value .
Similar to Amazon’s setup of “frequently bought together” items which prompt’s buyers to purchase multiple extra items.
So all looking pretty sweet for ETSY & it’s share price was flying!
What about this global Pandemic?
ETSY has adapted quick to the lockdown environment & offered many DIY craft projects for home & useful pandemic related supplies such as home made face masks & hand sanitisers.
Does ETSY have high debt?
It’s vital before investing into any business that your check the companies balance sheet & debt levels. Especially if investing during a risky recessionary period.
Reviewing ETSY’s balance sheet it’s clear to see it’s looking healthy & they have plenty of free cash flow to whether this storm.
They have even being using $817 million in cash to help their sellers by removing upfront ad fees & they have even being advertising to drive new customers to their business.
DEEP DIVING INTO THE STOCK) ———-
- Trading at 12.1% below its fair value
- Earnings are forecast to grow 29.31% per year
- Earnings grew by 23.8% over the past year
