Etsy (NASDAQ: ETSY) has been a standout performer in the e-commerce sector since its IPO in 2015. The company has a loyal customer base, a strong brand, and a niche focus on handmade and vintage items. In recent quarters, Etsy has been facing some challenges, including rising competition from Amazon (NASDAQ: AMZN) and the impact of the COVID-19 pandemic. However, the company remains optimistic about its long-term prospects and is expected to report strong results in the upcoming Q2 earnings report.
Q2 Expectations
Analysts are expecting Etsy to report revenue of $583.6 million in Q2, up 11.6% year-over-year. This would represent a deceleration from the 13.5% growth rate reported in Q1. The consensus EBITDA estimate is $134.6 million, up 14.6% year-over-year. This would represent a slight acceleration from the 13.9% growth rate reported in Q1.
Key Trends to Watch
There are a few key trends to watch in Etsy’s Q2 report. First, investors will be looking for signs of continued growth in the company’s core marketplace business. This business has been the primary driver of Etsy’s revenue and profitability in the past. Second, investors will be interested in hearing about Etsy’s progress in its newer businesses, such as Etsy Wholesale and Etsy Payments. These businesses have the potential to drive significant growth in the future.
Valuation
Etsy is currently trading at a forward price-to-sales ratio of 4.5x, which is in line with its historical average. However, the company’s growth prospects are better than average, which suggests that the stock could be undervalued.
Risks
There are a few risks to consider before buying Etsy stock. First, the company faces competition from larger e-commerce players such as Amazon. Second, the company’s revenue is heavily dependent on the health of the handmade and vintage market. Third, the company’s stock is relatively volatile, which could lead to losses in the short term.
Conclusion
Etsy is a well-run company with a strong brand and a loyal customer base. The company is expected to report strong results in the upcoming Q2 earnings report. However, there are some risks to consider before buying Etsy stock. Investors should carefully consider these risks before making a decision.
Kind regards
S. Sing
