This year has proven to be a roller-coaster for investors, s many lost big in March but the recovery has been equally impressive. A record number of stocks have bounced off their March and April lows, more than doubling since then. However, one stock stands above rest.
Etsy Inc. (NASDAQ: ETSY) is the top-performing stock in the S&P 500. Most investors would think that the best stock in the index would have ties to COVID-19 in some fashion, but this online marketplace has only obliquely benefited from the pandemic.
Excluding Tuesday’s move, Etsy’s stock was up 284% year to date and up 302% in the past 52 weeks. The stock had doubled in the past six months alone.
The company released its most recent quarterly report at the end of October. Ultimately, Etsy beat estimates by reporting third-quarter earnings of $0.70 per share on revenues of $451.48 million. Consensus estimates were calling for $0.62 per share and $418.7 million.
While the results may not seem like a huge beat, the other numbers proved to be the driving force for this stock’s performance. The consolidated gross merchandise sales and revenue growth increased 119% and 128%, respectively.
These results, and the stock’s move, were largely driven by changing consumer shopping habits over the past few years. The move to e-commerce has been precipitated by the likes of Amazon and Walmart, and many other retailers are now adopting a more omnichannel model. So where does Etsy fit into the mix?
Walmart and Amazon’s platforms offer everyday goods, groceries, clothes and more for consumers. Note that the traffic on these platforms is comparatively huge, implying lower margins but also much higher revenues. Etsy serves a more niche market. It offers more eccentric and artisanal goods on its marketplace that are much more customized than almost anything on Walmart or Amazon’s respective platforms. As more consumers are shopping online, Etsy is seeing more growth on its platform, as evidenced by its most recent quarterly report.
While more people are staying at home due to the pandemic, they are looking to fill their homes with art or knickknacks. Etsy’s offerings serve this market effectively and, with the rising tide of e-commerce, this has been an especially big year for the company.
Etsy stock traded up 4% on Tuesday to $176.93, in a 52-week range of $29.95 to $179.88. The consensus price target is $163.29.
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