Despite Setbacks, Etsy Continues To Push Forward
Etsy is a peer-to-peer e-commerce website where users buy and sell handmade crafts, vintage items, art, and photography. The site launched in 1998, grew steadily and had an initial public offering (IPO) on the NASDAQ (ETSY) on April 16th, 2015, priced at $16 a share. That same year, Amazon announced, Homemade, its competitor to Etsy.
I truly thought Etsy was going to be Amazon’s next meal and because Ebay was also in the marketplace, seriously considered shorting Etsy at the time. Etsy has challenges finding it’s footing the first couple of years and the company eventually had to lay off employees, which included the firing of it then CEO, Chad Dickerson.
In 2017, Etsy hired Josh Silverman as their CEO. A former executive at eBay and American Express, Silverman brought consumer technology businesses and global marketplaces experience to Etsy. He focused on streamlining the business and put more resources and energy into the initiative that would generate more revenue.
Etsy is proving that their niche business model is sticky and shutting up all the doubters, including myself. But I finally did get to short Etsy and I believe it was in March. As the equity markets were crashing as a reaction of COVID-19 and the world economy shutting down, I notice unusual options activity in Etsy and made my move. Because we were living through what would be the fastest bear market in history, after being up several 100s of percentage, I took my profits and ran.
In the first week of March, Etsy saw "a significant drop in traffic," as consumers were whipsawed by the unfolding pandemic and how to respond.
In early April, public health officials encouraged Americans to wear fabric face masks. That became Etsy's moment of opportunity. The company witnessed a tremendous surge of demand for fabric face masks right away on its website.
Etsy quickly responded to the opportunity. Among other things, it updated search algorithms for its website so that when people searched for masks, rather than seeing a collection of Halloween items, they saw masks for coronavirus protection instead. The company also put out a call to those who sell products on Etsy to begin making masks.
The result? Etsy sold about $133 million worth of fabric face masks, about 12 million of them in the month of April, the company said. It's among the reasons why Etsy stock is now trading near record highs.
But Wall Street thinks Etsy Inc. can continue to move higher.
Known for its vintage and handmade goods, Etsy received two sizable price target increases, one from Goldman Sachs thinks despite the economy opening back up, Etsy can take advantage of what should be continued mass buying online vs brick and mortar and raised their price target to $120. Meanwhile, RBC Capital Markets raised its target to $117 reiterating a similar transformation as more and more consumers make the permanent switch to buying online and thinks Etsy momentum is sustainably.
If you believe in the Etsy movement, the chart suggest to go long at the 4 hr demand at $96 or the daily demand at $84.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
Posted Using LeoFinance
