Why Etsy Was The Best Performing E-Commerce Stock In 2020

NASDAQ: ETSY | Etsy, Inc. News, Ratings, and Charts

Based in Brooklyn, New York, Etsy, Inc. (ETSY) operates a marketplace where people around the world connect, both online and offline, to make, sell, and buy goods. Its online marketplaces include Etsy.com and Reverb.com. Through its platform, the company offers handmade and vintage items, art, and supplies, as well as regular items such as clothing, housewares, paper goods, candles, bags and purses, music, and wood-working items.

Riding the e-commerce wave, the company’s business grew significantly last year with a focus on its unique offerings. The stock has gained 273.8% over the past year to close Wednesday's trading session at $167.57.

ETSY’s investments in marketing have paid off: roughly 50% of 138 million buyers on the company’s marketplace made at least one purchase over the past year. This is one reason why the company had an impressive performance in the third quarter (ended Sept. 30, 2020) with significant improvement in revenues and gross merchandise sales (GMS).

ETSY sold 24 million masks in the third quarter, which accounted for roughly 11% of its GMS. Moreover, its GMS, excluding mask sales, increased 93% year-over-year to $2.2 billion. This impressive performance and the potential upside based on several factors have helped the stock earn a “Buy” rating in our proprietary rating system. Here is how our proprietary POWR Ratings system evaluates ETSY:

Trade Grade: A

ETSY is currently trading above its 50-day and 200-day moving averages of $165.10 and $132.65, respectively, indicating an uptrend. Moreover, ETSY has gained 24.5% over the past three months, reflecting solid short-term bullishness. ETSY shares were trading at $169.15 per share on Thursday morning, up $1.58 (+0.94%). Year-to-date, ETSY has declined -4.92%, versus a 1.32% rise in the benchmark S&P 500 index during the same period.

The company’s revenue increased nearly 128% year-over-year to $451.5 million for the third quarter ended Sept. 30, 2020. Its GMS increased 119.4% year-over-year to $2.6 billion. Its number of active buyers increased 55.4% year-over-year to 69.6 million, and its number of active sellers increased 42% year-over-year to 3.7 million. Net income increased 520% year-over-year to $91.8 million, yielding EPS of $0.70, which increased 483.3% year-over-year.

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