New York-headquartered Etsy (NASDAQ:ETSY) is known as a global marketplace for creative goods (hand-crafted products, vintage items, etc.). If you believe that e-commerce has a bright future, then a long position in ETSY stock should make perfect sense. Right?
Unfortunately, it’s not as simple as that. The skeptics will undoubtedly question whether e-commerce’s momentum catalyzed by the Covid-19 pandemic in 2020, will persist as shoppers feel comfortable venturing out to bricks-and-mortar stores again.
As we’ll see in a moment, Wall Street’s doubts have recently been reflected in the price action of ETSY stock. Heck, even Ark Investment Management CEO Cathie Wood reportedly sold 1,387 shares.
The billion-dollar question, then, is about whether a sentiment shift is imminent. In the final analysis, we should find that Etsy is still a powerful revenue generator, and the platform’s growth is truly impressive.
A Closer Look at ETSY Stock
As terrible as Covid-19 has been, it’s fair to say that the lockdowns benefited Etsy for a while. The problem is that traders might have pumped up the company’s shares too fast and too far.
Pre-pandemic, ETSY stock typically hovered near $50. Once the lockdowns started, however, the stock soared.
Believe it or not, the Etsy share price topped out at $307.75 on Nov. 24, 2021. That’s when the sellers took control, quickly sending the stock back below $200.
As of early February 2022, ETSY stock was in the $150s. Contrarian dip buyers really ought to view the now-below $140 level as a terrific opportunity. In effect, we’ve been given a chance to turn back the clock and buy the shares at late-2020 levels.
Customers Are Returning
So, is Etsy’s e-commerce platform dead in the water because people are shopping at malls again? Let’s see what the data says.
Consider this: in fiscal year 2020, Etsy generated $1.7 billion in revenue. Fast-forward to fiscal year 2021, and we see that Etsy’s revenue was 35% higher, at $2.3 billion.
Moreover, the company capped off 2021 with solid fourth-quarter revenue of $717.1 million, representing 16.2% year-over-year growth.
Now turning to the bottom-line results, Etsy reported 161.5 million in Q4 2021 net income (up 8.8% year-over-year), as well as full-year 2021 net income of $493.5 million (up 41.3% compared to 2020).
It’s also worth observing that many of Etsy’s customers returned to the platform even while Covid-19 lockdowns were being lifted. Indeed, 53% of all active buyers and 37% of new buyers who made a purchase in 2020, returned to Etsy’s platform to make a purchase in 2021.
Furthermore, 49% of Etsy’s 2021 active buyers had two or more purchase days. That’s a higher rate than 48% from 2020 and 41% from 2019.
Courting Male Shoppers
Clearly, Etsy is seeing return customer visits and exhibiting revenue growth. What, then, is next for this intriguing e-commerce company?
The answer to that question might surprise you. A recent interview with Etsy CEO Josh Silverman suggested that the company may be in the process of courting men for their disposable income.
“As we looked at our opportunities going forward, we realized we’ve never really tried to speak to men,” the CEO observed. It’s interesting, I’d say, that Silverman just recently had this epiphany.
Still, better late than never, as they say. In any case, Silverman made it clear that Etsy is expanding its outreach efforts to the male shopper demographic.
“There’s tremendous amounts of merchandise on our platform that’s great for men. So we’re now starting to merchandise more directly to men. We’re starting to advertise in channels where men are a bigger part of the viewership,” he explained.
Will it be “cool” for men to shop on Etsy’s platform in 2022? If so, then the company could expand its already strong revenue stream.
The Bottom Line on ETSY Stock
ETSY stock watchers see that while the data shows that even if the “lockdown trade” has come and gone, Etsy is still able to grow its revenue and net income.
Will 2022 be the year when men come flocking to Etsy’s platform? Only time will tell, but it’s a thought-provoking question.
Meanwhile, feel free to buy the dip in ETSY stock. Despite the skeptics’ pessimism, the sales numbers indicate that e-commerce is, in fact, alive and well.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.comPublishing Guidelines.
