The Stock
Read management/analysts’ comments on quarterly reports
The management is quite bullish on Etsy’s growth prospects and sees double-digit sales growth in the final three months of the fiscal year. Etsy enjoys an edge over rivals due to the uniqueness of its merchandise. As the company adds new sellers, there is a corresponding increase in the number of buyers, thanks to the two-sided business model.
Margin Growth
Over the past few years, Etsy’s quarterly earnings either matched or beat analysts’ forecasts. There has been a steady increase in operating margin, reflecting the favorable spread of fixed costs and minimal capital expenditures. The full-fledged platform offers ample room for growth; plans are afoot to expand to new geographies including Europe and Asia.
In the September quarter, revenues moved up 18% annually to $532. 4 million and topped expectations. However, higher operating costs weighed on the bottom-line performance and earnings dropped to $89.9 million or $0.62 per share from $91.8 million or $0.70 per share last year but came in slightly above the consensus forecast.
Sustainability
While the company has been able to retain the customers it acquired during the pandemic, it needs to be seen whether the buyer growth and purchase frequency are sustainable. To a certain extent, Etsy’s growth prospects would depend on how the new shopping trend brought about by the pandemic shapes up going forward.
Amazon.com stock research summary | Q3 2021
It’s gratifying to see how shoppers have loved the experience they’ve had in Etsy and are coming back for more. Even in a world of greatly expanded choice, Etsy is getting better as it gets bigger. As fast as e-commerce has grown over the past 18 months, we have grown substantially faster, indicating that we’re gaining and we’re expanding our TAM with depth across many categories and geographies. We’re moving in a different direction than commoditized marketplaces and have more conviction than ever to invest with discipline in what we see as a multi-trillion-dollar market opportunity. And to strengthen our positioning for further growth in 2022 and beyond.
ADVERTISEMENTJoshua Silverman, chief executive officer of Etsy
Etsy’s stock traded slightly higher in the early hours of Tuesday, after closing the previous session higher. The stock has gained about 28% since the beginning of the year and mostly stayed above the long-term average.