COVID & ETSY
SCALE 89 is a newsletter about high growth stocks:
Etsy is an online marketplace for unique and creative goods. They are one of the companies benefiting and growing due to the COVID-19 pandemic because customers are turning to Etsy for masks and other home goods. I remember back when the pandemic started and I needed a mask. My first choice was Amazon but they were sold out so I went to my second choice - Etsy. Since my initial mask purchases, I’ve gone on to buy other items like a handmade bowl, air plants, and several decorative planters. I like unique and handmade items so there are tons of options for me and the millions of new customers using Etsy during COVID.
Our mission to “Keep Commerce Human” is rooted in our belief that, although automation and commoditization are parts of modern life, human creativity cannot be automated and human connection cannot be commoditized. -Etsy
What does Keep Commerce Human mean?
Recently, I ordered a new plant from Etsy from a small shop in California. It had been several days and the item had not shipped yet so I emailed the seller. He sent me a nice note and said his wife had just had a baby so he was delayed 1-2 days. The seller said the plant would be out the next day. When my plant arrived, he included a nice handwritten note and a free 2nd plant. It was a reminder I was dealing with another human - a regular guy and small local owned business just trying to get by.
Key Data
Active Buyers: 60.3 million (up 41% YoY)
Active Sellers: 3.1 million (up 35% YoY)
138+ million all time buyers
GMS excluding mask sales for the Etsy marketplace was $2.2 billion (up 93% YoY)
11% of the Etsy marketplace’s overall GMS was from mask sales
ETSY Revenue Growth
2017: $441.2 million
2018: $603.7 million
2019: $818.8 million
2020 Estimate: $1.4-1.6 Billion (This is my own estimate)
Q2 of 2020: $428.7 million (up 136.7% YoY)
Q3 of 2020: $451.5 million (up 128.1% YoY)
Etsy is growing revenue at great high growth rates and revenue is accelerating during COVID. From 2017 to 2018, they grew at 36.8%. From 2018 to 2019, Etsy grew at 35.6%. This means that pre-COVID, they were growing around 35% each year. For the 2nd quarter of 2020, Etsy did $428.7 million in revenue due to the extreme surge in demand during COVID. In Q2 they grew revenue at 136.7% year over year which shows extreme growth and demand. In their recent Q3 of 2020, they did $451.5 million in total revenue, which represents 128.1% year over year growth. This extreme acceleration in revenue growth is so rare and it is a fantastic opportunity for investors.
Why Etsy?
Etsy was growing at impressive rates before Covid at 35-36% YoY so it was already a fast growing tech and e-commerce company. During the pandemic, consumers have rushed to buy medical related goods, masks, home goods, and food at much higher rates. People are relying more on e-commerce and delivery to get the items they need. Etsy filled a gap because regular people could make masks and sell them on Etsy. These millions of new customers will come back for more Covid related items and holiday gifts.
Etsy is the global marketplace for unique and creative goods. We connect millions of buyers and sellers from nearly every country around the world to leverage the power of business. Our mission is to "Keep Commerce Human."
ETSY stock
Etsy stock has done very well year to date and the stock is up 214%. It is showing a lot of strength and momentum as we gear up for the holiday shopping season. More consumers are relying on e-commerce this year to avoid shopping in malls. Many of the millions of people that turn to Etsy will come back for other items during the year making it a great investment idea for many years.
ABOUT ME
I spent 8 years working in Tech in sales, marketing and growth roles. From startups to large Enterprise, I’ve seen how fast software can move. I worked on high growth teams selling software to leading companies in North America. Over the years, I became a top performer and went to various offices to train others on how to sell software and grow teams. Now, I’m a full-time investor, options trader, and independent writer. I’m following my passion for investing that started 13 years ago. Thank you for supporting my work as a writer and I hope you find value in my research, articles and perspective. You can also find me on Twitter.
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Disclosure: Not Financial Advice
I currently have shares and call options for Etsy
James Carter & SCALE 89 does not provide financial or investment advice. None of my content can be construed as advice. This article and my tweets are for informational purposes only.