Currently ETSY is facing a lot of macro headwinds, especially inflation, rising interest rates, low appetite for “pandemic stocks”, etc. It’s also facing seller strikes, and faces significant competition. However, it’s quite profitable, relatively well managed, can produce high returns on invested capital with no inventory, occupies a competitive niche in handmade goods, and has a very long runway for growth (small size, many more countries to expand into, no issues with market saturation, broad appeal across cultures, etc). Its customer base has been surprisingly sticky even post-pandemic. My relatively conservative DCF valuation suggests it’s undervalued.
Overall, I think that most of the issues Etsy is currently facing will be temporary and won’t matter much over the long haul. What is your bear case for Etsy over a time horizon greater than 5 years?
Leave a Reply