😷 Come for Masks, Stay for the Rest
Pandemic shopping helped Etsy, but sales of its unique offerings are also up
Hey Global Investor, here's what you need to know before the US markets open.
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Come for the Masks, Stay for the Rest – Etsy’s Strategy for Smashing Expectations
Pandemic shopping helped Etsy, but sales of its unique offerings are also up.
Background: Etsy is an e-commerce platform focused on selling handmade or vintage items and craft supplies. The company’s mission is to keep commerce human by building online communities of sellers and connect sellers with millions of buyers worldwide looking for unique handmade items.
Etsy follows in the tradition of open craft fairs, giving sellers personal storefronts to list their goods for a fee of $0.20 per item. The company doesn’t own a warehouse but connects buyers directly with the businesses through its platform.
While many retailers – big and small – have faded since the rise of e-Bay and Amazon, Etsy has stayed the course. In fact, 2020 might be its biggest year since its launch in 2005. Etsy’s performance during the pandemic results from the company’s strategic positioning over the last decade and a half. Having entered the S&P500 Index in September, Etsy is now mentioned in the same breath as Amazon, Walmart, and Target.
What Happened?: Etsy reported Q3 net income of $91.8M or $0.70 per share (compared to $14.8M or $0.12 per share from the year-ago quarter). Revenue at $451M more than doubled in the same time frame.
The company’s gross merchandise value (the amount of sales on the platform) was up 119% to $2.6B, with masks contributing to 11% of GMV. Etsy saw 14.8M new and reactivated customers in Q3. They came on the platform to buy masks and ended up purchasing other products. The e-commerce retailer plans to double down on marketing and improving customer experience to increase stickiness for the new buyers.
CEO Josh Silverman said 2021 will be difficult to forecast since 2020 has set a high performance bar already. The company is also expecting a lower ROI and says the marketing push will impact margins.
Market Reaction: Etsy’s stock is nearly 200% YTD. However, despite posting stellar Q3 results, the stock sold off 5.17% on Thursday, closing at $132.42.
Company Snapshot 📈
ETSY $132.42 -7.22 (-5.17%)
Analyst Rating (17 Ratings) BUY 94% HOLD 0% SELL 6%
Swing and a miss: Apple Shares Decline After iPhone Sales Miss, China Drops 29% (AAPL +3.71%)
Bittersweet: Honeywell's profit and revenue decline, but beat expectations (HON +2.137%)
Going Up: Amazon reports sales growth of 37%, topping estimates (AMZN +1.52% )
Later Today 🕒
6.00 PM IST: Core inflation
6.00 PM IST: Consumer spending
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Before Market Open: RBC Bearings Inc (ROLL)
Fun Fact of The Day 🌞
Every time you shuffle a deck of cards, you get a combination that's never existed.
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