3/20/2023 0 Comments Etsy multipass covidConsidering this, it’s reasonable to assume that Etsy’s margins could at least improve 1.5x to about 18% by 2023. Etsy’s larger e-commerce platform peers such as eBay EBAY have operating margins that were roughly double Etsy’s as of 2019. Etsy’s advertising sales are also soaring, with its Services business (about 25% of total revenue), which includes ad sales, more than doubling between 20.ĭid you know Etsy stock is up 5x since late 2017? See our analysis How Did Etsy Stock Grow Over 5x Since 2017? for the underlying numbers behind the surge.Ĭombine revenue growth with the fact that Etsy’s Net Margins (net income, or profits after all expenses and taxes, calculated as a percent of revenues) are on an improving trajectory – they grew from roughly -8% in 2016 to about 12% in 2019. For perspective, Etsy indicated the GMS rose by 79% year-over-year in April 2020, even after excluding mask sales. With Covid-19 expected to accelerate the shift online, Etsy’s growth rate should only rise. While the company has grown its gross merchandise sales (GMS) at a CAGR of 21% since 2016 to $5 billion in 2019, it still remains small in context to its addressable market of $250 billion online for relevant categories it sells and over $1.7 trillion, including the offline space. Etsy has executed well in carving out a niche for itself in the e-commerce space, focusing on handmade products, vintage items, and craft supplies, fending off competition from the likes of Amazon AMZN Handmade marketplace. While the Covid related surge will be a one-off event, the company should be able to convert its new users into regular customers while cementing itself as the go-to platform for unique items, helping to drive long-term growth.įirstly, we believe that Etsy’s revenues can grow by 2.7x to levels of about $2.2 billion in 2023 from about $820 million in 2019 and an estimated $1.2 billion in 2020, representing a growth rate of almost 38% per year (for context, annual growth was about 31% over the last three years). Moreover, the company focuses on human connections between buyers and sellers – who are typically one-person businesses – and this could also help it to differentiate itself from other online marketplaces. Etsy focuses on unique products such as vintage items, craft supplies, and handmade items that are unlikely to be available locally. Although Etsy’s growth will no doubt slow over 2021, we think the company should still hold its own even after the pandemic. “We understand these are extraordinary circumstances, and we’ll continue to stand by our sellers as this situation evolves.That said, could the stock – which is now up 4x year to date and trades at over 90x projected 2020 earnings – be poised for a correction? After all, highly effective Covid-19 vaccines are being rolled out, potentially marking the beginning of the end of the pandemic and people could start venturing back to brick and mortar stores as things get back to normal. “We’re committed to supporting our sellers during these challenging times, and one of the best ways we can help is by bringing them buyers so their businesses continue to thrive,” said an Etsy spokesperson. The company is also offering sellers a 24/7 dedicated help team to assist with issues in areas such as shipping, delivery and deadlines.” In addition, Etsy is offering all sellers a one-month grace period to pay outstanding bills starting March 20, no questions asked. As a result of Etsy’s additional investment, sellers will not have to pay the normal fee charged for third-party ads which result in a sale until at least May 1. Introduced in February 2020, Offsite Ads enables Etsy sellers to advertise items on Google, Facebook, Instagram, Pinterest, and Bing without any upfront costs. These include a $5 million investment through the end of April in the Offsite Ads program. In an open letter to sellers posted on the Etsy site, CEO Josh Silverman said the company is continuing all normal activities, as well as taking steps designed to bring to more buyers to sellers’ online shops. A handmade and vintage goods e-commerce platform is introducing three new benefits for sellers who may be impacted by COVID-19.
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