Etsy Stock Already Closing In On Our Aggressive 2019 Price Forecast

Etsy Stock Already Closing In On Our Aggressive 2019 Price Forecast
iStock.com/Tennessee Witney

Etsy Stock Up 45% Since January, Outlook Remains Bullish

Etsy Inc (NASDAQ:ETSY), the e-commerce marketplace for one-of-a-kind products, is already zeroing in on our aggressive 2019 stock forecast of $75.00.

Back in mid-January, when Etsy stock was trading around $52.00, I made my aforementioned prediction of $75.00. At the time, that represented a roughly 45% annual gain.

My forecast was aggressive compared to the forecasts of Wall Street analysts covering Etsy. But it turns out that perhaps my prediction was a little too conservative.

On March 4, Etsy shares hit a new 52-week high of $73.35, for a year-to-date gain of 58%. Over the same time frame, the S&P 500 only increased 11.1%.

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Over the last 52 weeks, Etsy’s share price has soared 168.5%. The S&P 500, however, has only gone up 1.6% in that period. Since the beginning of January 2019, the stock has gone up 83%.

Thanks to a series of strong quarterly results and a robust outlook, my new 2019 Etsy stock forecast of $85.00 represents a roughly 27% increase from its current price of about $67.00.

Wall Street analysts have also upped their 2019 stock forecast for Etsy Inc, with a high estimate of $80.00, a median estimate of $71.00, and a low estimate of $49.00.

Etsy Inc Overview

Etsy is where you go if you want your significant other, your family, or your friends to think you’re really creative when it comes to gift-giving.

Instead of selling mass-produced merchandise, the company is a portal where independent sellers, from virtually every country in the world, sell all kinds of unique handcrafted goods and vintage treasures.

The one-stop shop provides sellers with payment processing, promoted listings, on-site advertising, and Web design services.

Etsy Stock Information
Market Cap $8.1 billion
Beta 0.58
52-Week Change 168.5%
52-Week High $73.35
52-Week Low $26.17
Shares Outstanding 120.5 million
Float 103.0 million
50-Day Moving Average $57.82
200-Day Moving Average $50.52

(Source: “Etsy, Inc. (ETSY),” Yahoo! Finance, last accessed March 7, 2019.)

Etsy stock has been on a tear over the last two years, advancing 70.8% in 2017 and 133% in 2018. Meanwhile, the company continues to have great momentum in 2019.

Yes, Etsy’s share price dipped in October, but so did the broader markets. Unlike the rest of the markets, though, Etsy’s sell-off was short lived.

The company’s share price rebounded in early December, hitting a then-record high of $57.95. That momentum was stifled in the latter part of the month, when it hit the same headwinds as the rest of the stock market.

It has been a different story in 2019. Thanks to investor optimism and a string of excellent financial results, Etsy’s share price is currently up about 45% year-to-date.

While Etsy stock is down from its March 4 high, so too is the rest of the stock market. In fact, all of the major stock indices are down, but it appears as though it’s just a healthy pullback.

The Nasdaq has posted 10 straight weeks of gains, so a little profit-taking may be in order. This is also good for longer-term momentum.

Chart courtesy of StockCharts.com

Strong Q4 and Year-End Results and Robust Guidance

On February 25, Etsy announced that its fourth-quarter gross merchandising sales (GMS), for the period ended December 31, 2018, came in at more than $1.2 billion. (Source: “Etsy, Inc. Reports Fourth Quarter and Full Year 2018 Financial Results,” Etsy Inc, February 25, 2019.)

That’s more than a 20% increase over the $1.0 billion recorded in the same prior-year period.

Total revenue for the fourth quarter of 2018 was up 46.8% year-over-year at $200.0 million.

For full-year 2018, Etsy’s GMS was up 20.8% year-over-year at $3.9 billion. Total revenue in the year grew 36.8% to $603.7 million.

As of December 31, 2018, the company’s cash, cash equivalents, and short-term investments were $624.3 million.

“By making Etsy a great destination for holiday shopping, we delivered strong fourth quarter results to end an excellent year,” said Josh Silverman, CEO.

Rachel Glaser, CFO added, “We grew and strengthened our business, returned capital to stockholders, and finished the year in a strong cash position enabling continued growth investments.” (Source: Ibid.)

Under its stock repurchase program, in the fourth quarter, Etsy Inc repurchased about $45.0 million worth (916,083 shares) of its common stock.

For full-year 2019, Etsy inc expects to report year-over-year GMS growth of 17%–20% (about $4.6–$4.7 billion) and year-over-year revenue growth of 29%–32% (about $779.0–$797.0 million).

Analyst Take

If you like companies that report consistently strong earnings, you may want to keep an eye on Etsy stock.

In 2018, Etsy Inc posted four quarters of double-digit GMS and revenue growth. The company remains bullish and, by all accounts, 2019 looks like it will be another solid year.

Admittedly, Etsy’s financials hinge on consumer discretionary spending, broader economic growth, and other economic indicators. Yet, despite tepid economic data rolling in for January and February, Etsy expects its full-year GMS and revenue to grow.