Etsy Stock Is a Handmade Disaster Not Worth a Dime

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Etsy (ETSY) has been a huge money-loser for investors since its April IPO, and for obvious reasons. The company is deeply unprofitable, and ETSY is showing little sign of turning that around despite some modest top-line growth.

etsy 185 Dont Be Stupid   Google Will NEVER Buy EtsyI wrote about why ETSY stock was a bad buy several months ago, using the company’s S-1 filing as the only available data source. However, my fears have been reinforced by the company’s most recent earnings report in August. Consider that revenue was up 44% year-over-year, but total operating expenses were up 49%.

But if the numbers right now weren’t bad enough for Etsy stock investors, there’s also the rise of other handmade marketplaces that threaten to eat away at the site’s market share — most notably one from e-commerce giant Amazon (AMZN).

Named Handmade at Amazon, the marketplace launched today with about 80,000 items from around the world — much of it the same stuff that’s selling on Etsy, like overpriced coffee tables made from salvaged wood.

Look, I have nothing against the crafty folks that ply their whimsical arts on Etsy or eBay (EBAY) or any similar e-commerce platform. But let’s be honest: There’s a big difference between being someone who makes this stuff and an investor who needs to see growth and profits from a publicly traded company.

Sure, there may be buyout rumors like the ones this summer after Alphabet (GOOG, GOOGL) name-dropped Etsy in its earnings report. And sure, there may be plenty of consumers who continue to support the platform.

But at the end of the day, it’s about numbers — and the numbers don’t add up to success for ETSY stock.

And with Amazon entering the fray, things are likely to get worse in the future as the e-commerce titan goes toe-to-toe with a smaller site without a lot of capital to throw around.

That tells me ETSY stock is a lost cause, and isn’t worth holding now … or perhaps ever.

Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. As of this writing, he did not hold a position in any of the aforementioned securities. Write him at editor@investorplace.com or follow him on Twitter via @JeffReevesIP.

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