Entering text into the input field will update the search result below

Etsy: After A Record-Shattering 2020, Don't Rush To Buy

Apr. 05, 2021 6:00 AM ETEtsy, Inc. (ETSY)5 Comments
Gary Alexander profile picture
Gary Alexander


  • Etsy had its best year on record in 2020, growing revenue and GMS at north of 2x y/y.
  • Shares have nearly quintupled over the past year, but are currently down some 15% from highs during the recent tech rout.
  • Etsy is still guiding to about 130% year-over-year revenue growth in Q1.
  • But as we head into the rest of 2021 and Etsy starts comping against COVID-boosted results, its growth star fades.
  • There are a number of categories that drove Etsy's surge in 2020, such as masks and home goods, that may not see nearly the same strength in 2021.
  • I do much more than just articles at Daily Tech Download: Members get access to model portfolios, regular updates, a chat room, and more. Learn More »

With the recent rout in technology stocks, investors should be keenly on the lookout for richly-valued momentum trades that are still susceptible to further correction. Some of the best performers in 2020 may be highly at risk in 2021, and Etsy (NASDAQ:ETSY) is certainly one of those names.

The arts-and-crafts e-commerce site, once treated very dismissively by investors as a sort of second-rate eBay (EBAY), has seen its fortunes dramatically shift amid the pandemic. Amid a surge in e-commerce sales in general, both buyers and sellers flocked to Etsy's platform in 2020 to trade items from masks to home decor. Compounded with Etsy's 2018 decision to increase its fees on sellers (from 3.5% to 5.0%, a move that brought Etsy closer to higher-fee e-commerce alternatives like Amazon (AMZN) but triggered heavy backlash from its seller community), Etsy's revenue surged to levels never seen before.

Etsy's stock responded in kind, nearly quintupling over the past year. The February/March correction in tech stocks, however, has Etsy down ~15% from highs. The question for investors now is: is Etsy's trajectory upward and is now a good time to buy the stock on the dip, or will the weakness continue?

Data by YCharts

I continue to remain neutral on Etsy. I see both the bullish and bearish sides of the argument on this stock, and frankly I see a bit more risk to the downside on this stock than to the upside. The truth is that while Etsy executed tremendously while other businesses (especially consumer-facing retail businesses) struggled amid COVID-19, much of this strength is now in the rearview mirror and it'll be hard for Etsy to stage a repeat performance.

On the bright and bullish side of the Etsy argument:

  • The pandemic has brought a flock of new buyers and sellers to the

For a live pulse of how tech stock valuations are moving, as well as exclusive in-depth ideas and direct access to Gary Alexander, subscribe to the Daily Tech DownloadHighly curated focus list has consistently netted winning trades of 40%+.

This article was written by

Gary Alexander profile picture
With combined experience of covering technology companies on Wall Street and working in Silicon Valley, and serving as an outside adviser to several seed-round startups, Gary Alexander has exposure to many of the themes shaping the industry today. He has been a regular contributor on Seeking Alpha since 2017. He has been quoted in many web publications and his articles are syndicated to company pages in popular trading apps like Robinhood.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.