Why Etsy Stock Soared by More Than 8% Today - Nasdaq

Summary

What happened

Investors on Friday decided that they had found a bargain in shares of online arts and crafts marketplace Etsy (NASDAQ: ETSY) -- and they swooped in to snap them up, bidding the stock up by 8.1% as of 11:08 a.m. ET.

What happened

Investors on Friday decided that they had found a bargain in shares of online arts and crafts marketplace Etsy (NASDAQ: ETSY) -- and they swooped in to snap them up, bidding the stock up by 8.1% as of 11:08 a.m. ET.

You can probably credit a couple of Wall Street analysts for some of that renewed optimism.

So what

Analysts from two Wall Street firms have commented positively on Etsy over the past three days. First, Raymond James upgraded the stock to "outperform" on Wednesday, and put a $100 target price on the shares. Then on Friday, Evercore ISI cut its price target, but to a similar level of $95 -- more than 20% higher than where Etsy stock was trading late Friday morning.

In Raymond James' note, covered on StreetInsider.com, its analyst argued that while Etsy's growth will certainly slow as people revert to their pre-pandemic shopping behaviors, the stock's 62% decline year to date has created a buying opportunity "to own what we view as one of the highest quality names in digital commerce." It might take a year or so for Etsy to get through the coming recession so that the company's long-term potential becomes obvious again -- but the analyst believes it will get there.

Evercore largely agrees with this assessment, writing in a note covered by TheFly.com that while consumers are spending less in the current uncertain macro-economic environment, which will weigh on growth in the short term, Etsy still boasts strong profit margins and strong free cash flow on the sales it does make -- and trades at a bargain price as well.

Now what

I agree. Etsy has been on my own shopping list for a while now for precisely the reasons Evercore cites. Valued at $10.1 billion and with nearly $550 million in trailing free cash flow, its price-to-free-cash-flow ratio is just 18.5. That's plenty cheap for the 19.5% long-term annualized earnings growth rate that analysts forecast for the company.

While earnings and free cash flow are certainly coming down this year from their pandemic highs, Etsy boasts a defensible moat selling unique and handmade goods that are less apt to be found on competing websites such as Amazon or eBay. Its valuation has come down quite a lot -- as the analysts point out. And its free cash flow remains quite high despite the slowdown in consumer spending -- as they also point out.

Although the last eight or so months have certainly been rough on the stock, I think this popular e-commerce site operator will still be a long-term winner for value investors.

10 stocks we like better than Etsy

When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

They just revealed what they believe are the ten best stocks for investors to buy right now... and Etsy wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of June 2, 2022

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Etsy. The Motley Fool recommends eBay and recommends the following options: short July 2022 $57.50 calls on eBay. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Why Etsy Stock Soared by More Than 8% Today - Nasdaq
Photo Credit: Nasdaq

Woman quit her job amid pandemic and launched The Patchwork Punk - Richmond Times-Dispatch

On a busy Sunday afternoon, Liz Scott chatted with customers about her wares at the Lakeside’s Local Makers Market. Known as The Patchwork Punk, Scott creates handmade pillows, fi …

Read more here
Woman quit her job amid pandemic and launched The Patchwork Punk - Richmond Times-Dispatch

Etsy, Inc. (ETSY) CEO Josh Silverman Presents at Oppenheimer 25th Annual Technology, Internet & Communications Conference (Transcript) - Seeking Alpha

Etsy, Inc. (NASDAQ:ETSY) Oppenheimer 25th Annual Technology, Internet & Communications Conference August 9, 2022 1:15 PM ET Company Participants Rachel Glaser - CFO Josh Silverm …

Read more here
Etsy, Inc. (ETSY) CEO Josh Silverman Presents at Oppenheimer 25th Annual Technology, Internet & Communications Conference (Transcript) - Seeking Alpha

I tried 3 TikTok-viral side hustles and lost 20 cents - Mashable

We live in a capitalist society intent on grinding down the human spirit into sellable parts. As such, for many people it is no longer enough to work a steady, full-time job in pur …

Read more here
I tried 3 TikTok-viral side hustles and lost 20 cents - Mashable

Etsy Misses Out on Opportunity To Support Sellers During Its Labor Day Sale - eSeller365

Etsy is asking sellers to participate in its Labor Day weekend sales event starting on August 31 targeting shoppers in the US and Canada. Unfortunately, the only way for sellers t …

Read more here
Etsy Misses Out on Opportunity To Support Sellers During Its Labor Day Sale - eSeller365

How to Take Advantage of Etsy's Repeat-Buyers Feature - EcommerceBytes

Etsy enhanced a feature that helps drive repeat buyers to individual sellers’ shops, and it offered tips on how sellers could take advantage of the feature. The “Etsy Updates feed …

Read more here
How to Take Advantage of Etsy's Repeat-Buyers Feature - EcommerceBytes