We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Etsy, Inc. (ETSY - Free Report) was the right company for the pandemic times. This Zacks Rank #1 (Strong Buy) had a transformative, and record, year in 2020 as consumers across the world turned to online shopping during the coronavirus pandemic.
Can it keep the momentum or is all the good news priced in?
Etsy operates an online marketplace that features homemade products and goods by artists and craftspeople from around the world.
Another Big Beat in the Fourth Quarter of 2020
On Feb 25, Etsy reports its fourth quarter 2020 results and posted another big earnings beat. Earnings were $1.08 versus the Zacks Consensus of just $0.60. That's a beat of 80%.
Revenue was up 128.7% to $617.4 million, due to growth in both Marketplace and Services.
For the full year, revenue was up 110.9% to $1.7 billion, a new record.
Gross Merchandise Sales (GMS) also soared in the quarter and the full year.
In the fourth quarter it was up 117.7% to $3.6 billion from $1.65 billion in the holiday quarter the year before.
For the year, it soared 106.7% to a new record of $10.28 billion from $4.97 billion a year ago.
The company also set records during the "Cyber Five" shopping days from Thanksgiving through Cyber Monday. GMS was up 135% for that period compared to a year ago.
And it isn't all about mask sales anymore.
Although those soared when the pandemic initially hit in the spring of 2020, GMS sales for the Etsy marketplace were still up 118% year-over-year to $3.3 billion in the fourth quarter, even excluding the mask sales.
Mask sales were just 4% of the marketplace's overall GMS in the quarter.
Bullish Outlook on First Quarter 2021
Etsy didn't provide guidance for the full year 2021 but it did give guidance for the first quarter.
It has now been "discovered" by shoppers, thanks to all the mask buying, and they are coming back for more purchases even outside of the masks.
During 2020, Etsy acquired 61 million new and reactivated buyers and saw nearly 160% growth in habitual buyers.
Those higher numbers are reflected in their guidance.
Revenue is expected to be up between 125% and 135% to a range of $513 million to $536 million.
GMS growth is expected to rise 115% to 125% to a range of $2.9 billion to $3.1 billion.
Those are incredible numbers for a non-holiday quarter.
But this big growth could just be the new "norm" for the company.
Analyst Estimates Raise Earnings Estimates
The analysts are buying the bullish story.
9 estimates have been revised higher in the last month for both 2021 and 2022.
The 2021 Zacks Consensus has jumped to $2.77 from $1.96 in the last month. That's earnings growth of just 3%, however, as the company made $2.69 during last year's record year.
But the analysts see further double digit growth again in 2022 with the Zacks Consensus jumping to $3.43 from $2.71 in the prior 30 days. That's growth of 24%.
Too Hot to Handle?
No one doubts the transformation in Etsy's business over the last year. It has gone up to the next echelon in e-commerce.
And if their guidance is any indication, they believe this growth can continue even as the pandemic recedes.
But how much do you pay for the shares?
They are up 414% over the last year but have pulled back during the 2021 growth stock weakness, losing about 40% in recent weeks.
They're still trading with a forward P/E of 72.
But if they continue to fall, could there be a buying opportunity if you believe the growth can continue?
Amazon (AMZN - Free Report) tried to compete with Etsy a few years ago, starting its own "Handmade" marketplace but it failed to make a dent in Etsy's business.
For those who believe that online shopping is here to stay in a big way post-pandemic, Etsy is one to keep on your watch list.
[In full disclosure, the author of this article owns shares of AMZN in her personal portfolio.]
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
Image: Bigstock
Bull of the Day: Etsy (ETSY)
Etsy, Inc. (ETSY - Free Report) was the right company for the pandemic times. This Zacks Rank #1 (Strong Buy) had a transformative, and record, year in 2020 as consumers across the world turned to online shopping during the coronavirus pandemic.
Can it keep the momentum or is all the good news priced in?
Etsy operates an online marketplace that features homemade products and goods by artists and craftspeople from around the world.
Another Big Beat in the Fourth Quarter of 2020
On Feb 25, Etsy reports its fourth quarter 2020 results and posted another big earnings beat. Earnings were $1.08 versus the Zacks Consensus of just $0.60. That's a beat of 80%.
Revenue was up 128.7% to $617.4 million, due to growth in both Marketplace and Services.
For the full year, revenue was up 110.9% to $1.7 billion, a new record.
Gross Merchandise Sales (GMS) also soared in the quarter and the full year.
In the fourth quarter it was up 117.7% to $3.6 billion from $1.65 billion in the holiday quarter the year before.
For the year, it soared 106.7% to a new record of $10.28 billion from $4.97 billion a year ago.
The company also set records during the "Cyber Five" shopping days from Thanksgiving through Cyber Monday. GMS was up 135% for that period compared to a year ago.
And it isn't all about mask sales anymore.
Although those soared when the pandemic initially hit in the spring of 2020, GMS sales for the Etsy marketplace were still up 118% year-over-year to $3.3 billion in the fourth quarter, even excluding the mask sales.
Mask sales were just 4% of the marketplace's overall GMS in the quarter.
Bullish Outlook on First Quarter 2021
Etsy didn't provide guidance for the full year 2021 but it did give guidance for the first quarter.
It has now been "discovered" by shoppers, thanks to all the mask buying, and they are coming back for more purchases even outside of the masks.
During 2020, Etsy acquired 61 million new and reactivated buyers and saw nearly 160% growth in habitual buyers.
Those higher numbers are reflected in their guidance.
Revenue is expected to be up between 125% and 135% to a range of $513 million to $536 million.
GMS growth is expected to rise 115% to 125% to a range of $2.9 billion to $3.1 billion.
Those are incredible numbers for a non-holiday quarter.
But this big growth could just be the new "norm" for the company.
Analyst Estimates Raise Earnings Estimates
The analysts are buying the bullish story.
9 estimates have been revised higher in the last month for both 2021 and 2022.
The 2021 Zacks Consensus has jumped to $2.77 from $1.96 in the last month. That's earnings growth of just 3%, however, as the company made $2.69 during last year's record year.
But the analysts see further double digit growth again in 2022 with the Zacks Consensus jumping to $3.43 from $2.71 in the prior 30 days. That's growth of 24%.
Too Hot to Handle?
No one doubts the transformation in Etsy's business over the last year. It has gone up to the next echelon in e-commerce.
And if their guidance is any indication, they believe this growth can continue even as the pandemic recedes.
But how much do you pay for the shares?
They are up 414% over the last year but have pulled back during the 2021 growth stock weakness, losing about 40% in recent weeks.
They're still trading with a forward P/E of 72.
But if they continue to fall, could there be a buying opportunity if you believe the growth can continue?
Amazon (AMZN - Free Report) tried to compete with Etsy a few years ago, starting its own "Handmade" marketplace but it failed to make a dent in Etsy's business.
For those who believe that online shopping is here to stay in a big way post-pandemic, Etsy is one to keep on your watch list.
[In full disclosure, the author of this article owns shares of AMZN in her personal portfolio.]
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>