$ETSY - The ultimate brand of personalization.
Why $ETSY could be $100B company by 2025 and a valuable lesson for New Investors.
Here is a Thread 🧵 //
Why $ETSY could be $100B company by 2025 and a valuable lesson for New Investors.
Here is a Thread 🧵 //
2/ $ETSY Product:
Etsy operates a marketplace offering a largest selection of locally made gifts. Everything from jewelry, clothing, pottery, bath, body, now home furnishing and 10-more areas!
They operate a two-sided marketplace between buyers (82M) & sellers (4.4M) as at 2020
Etsy operates a marketplace offering a largest selection of locally made gifts. Everything from jewelry, clothing, pottery, bath, body, now home furnishing and 10-more areas!
They operate a two-sided marketplace between buyers (82M) & sellers (4.4M) as at 2020
The Moat:
3/ Brand Recognition:
• Over 80%+ of purchases on $ETSY are made by organic buyers compared to 20% paid by marketing
• This level of word of mouth helps to lower CAC and drives scale.
• $ETSY has become a household name and this is likely to stick post-pandemic.
3/ Brand Recognition:
• Over 80%+ of purchases on $ETSY are made by organic buyers compared to 20% paid by marketing
• This level of word of mouth helps to lower CAC and drives scale.
• $ETSY has become a household name and this is likely to stick post-pandemic.
4/ On Brand - Consumers love $ETSY:
• $ETSY is differentiated by their unique product offering; >80% of their product can't be found anywhere
•Habitual buyers' growing over 157% including repeat buyers growing 97% YoY.
• Active buyers also grew 77%
People keep coming back!
• $ETSY is differentiated by their unique product offering; >80% of their product can't be found anywhere
•Habitual buyers' growing over 157% including repeat buyers growing 97% YoY.
• Active buyers also grew 77%
People keep coming back!
5/ Network effects of the marketplace:
The increased repeat buyers growing over 100% has led to increased sellers on the platform growing over -> 64% YoY and sellers are making 22% more money!
It's a powerful flywheel - The more buyers come on Etsy, the better for sellers.
The increased repeat buyers growing over 100% has led to increased sellers on the platform growing over -> 64% YoY and sellers are making 22% more money!
It's a powerful flywheel - The more buyers come on Etsy, the better for sellers.
6/ The Passion economy is booming!
• $ETSY has improved take-rate from negative 2% to around 5%.
• Due to the pandemic, the seller and creator economy is growing massively. Over 50% of $ETSY sellers do this full-time.
And we all know about how fast this market is growing!
• $ETSY has improved take-rate from negative 2% to around 5%.
• Due to the pandemic, the seller and creator economy is growing massively. Over 50% of $ETSY sellers do this full-time.
And we all know about how fast this market is growing!
7/ $ETSY TAM:
• Estimated at over $1.7 Trillion Market Opportunity.
• But if we took a TAM of over $250B and $ETSY with its 5% MarketShare while being the 4th largest e-Commerce in the US- What does the future represent?
•Also, $ETSY is growing 2.5x, fast as the industry!
• Estimated at over $1.7 Trillion Market Opportunity.
• But if we took a TAM of over $250B and $ETSY with its 5% MarketShare while being the 4th largest e-Commerce in the US- What does the future represent?
•Also, $ETSY is growing 2.5x, fast as the industry!
8/ eCommerce is still in its early Innings:
• Mckinsey's recent research report in February 2021 suggests eCommerce is are still less penetrated at 20% in the US. Therefore suggesting more opportunity.
• This is the Global Marketshare of eCommerce today.
We're just starting
• Mckinsey's recent research report in February 2021 suggests eCommerce is are still less penetrated at 20% in the US. Therefore suggesting more opportunity.
• This is the Global Marketshare of eCommerce today.
We're just starting
9/ On the Financial aspect;
• Revenue: $1.7B (111% YoY)
• 76% Gross Margins from 50% a few years ago!
• 31% EBITDA margins
• Massive signs of significant operating leverage.
$ETSY is growing both top-line and bottom-line by triple digits!
• Revenue: $1.7B (111% YoY)
• 76% Gross Margins from 50% a few years ago!
• 31% EBITDA margins
• Massive signs of significant operating leverage.
$ETSY is growing both top-line and bottom-line by triple digits!
10/ Another measure of the bottom-line.
This is the Return of Equity (ROE) [The profitability of a business in relation to the equity]
These days, Revenue growth is easy, but bottom-line metrics are hard.
Only the best of businesses can show such improvement below in ROE:
This is the Return of Equity (ROE) [The profitability of a business in relation to the equity]
These days, Revenue growth is easy, but bottom-line metrics are hard.
Only the best of businesses can show such improvement below in ROE:
11/ Future Growth Opportunities by 2025:
$ETSY offers much more...
• Home improvement is the fastest growing segment benefiting from the housing boom (Growth 118%+)
• I believe $ETSY will make a big acquisition in 2021 (soon)
• International expansion in the UK and Europe.
$ETSY offers much more...
• Home improvement is the fastest growing segment benefiting from the housing boom (Growth 118%+)
• I believe $ETSY will make a big acquisition in 2021 (soon)
• International expansion in the UK and Europe.
12/ The biggest risks to my thesis:
A potential decrease in market share within eCommerce as Competition heats up from Amazon or physical retail interactions post-Covid.
However, I will say that $ETSY has shown massive execution and $ETSY is growing 2.5x the eCommerce market.
A potential decrease in market share within eCommerce as Competition heats up from Amazon or physical retail interactions post-Covid.
However, I will say that $ETSY has shown massive execution and $ETSY is growing 2.5x the eCommerce market.
13i/ If you want to go deeper on $ETSY:
Best Resources:
a) @borrowed_ideas released a great write-up analysis on the business model, unit economics and everything about Etsy. Kudos!
borrowedideas.substack.com/p/deep-dive-on…
Best Resources:
a) @borrowed_ideas released a great write-up analysis on the business model, unit economics and everything about Etsy. Kudos!
borrowedideas.substack.com/p/deep-dive-on…
13ii/
b) @InvestmentTalkk has a great story on the Founding of $etsy. Kudos!
The execution from the current CEO, Josh Silverman has been phenomenal since 2017! He was the past CEO of Skype.
I'll let you read more:
investmenttalk.substack.com/p/a-history-of…
b) @InvestmentTalkk has a great story on the Founding of $etsy. Kudos!
The execution from the current CEO, Josh Silverman has been phenomenal since 2017! He was the past CEO of Skype.
I'll let you read more:
investmenttalk.substack.com/p/a-history-of…
14/ FY 2020 - Financial Highlights & Latest Updates:
I also put together an Indepth thread on 2020 Earnings and key takeaways last two months.
Etsy still remains one of my largest position.
They report earnings on May 5, 2021 I plan to share updates:
I also put together an Indepth thread on 2020 Earnings and key takeaways last two months.
Etsy still remains one of my largest position.
They report earnings on May 5, 2021 I plan to share updates:
https://twitter.com/InvestiAnalyst/status/1365096556689432578
*Bonus* - $ETSY offers a key lesson for Investors in context of 2021
Period: 2015 - 2017. $Etsy declined over 75%! meanwhile, Revenue-Gross profit were growing over 30%!!
Why?
1) Amazon launched their marketplace ($TDOC?)
Later,
2) Trump's election led to a rotation to value
Period: 2015 - 2017. $Etsy declined over 75%! meanwhile, Revenue-Gross profit were growing over 30%!!
Why?
1) Amazon launched their marketplace ($TDOC?)
Later,
2) Trump's election led to a rotation to value
16/ What happened next?
$ETSY grew >3000%!! in less than 5-years! i.e $10K Invested would be worth $300K+
Lesson: If you had the ability to look out over a long-term horizon (just 5-years), focus on the big picture and only fundamentals(!!)- you'll have caught a multi-bagger!
$ETSY grew >3000%!! in less than 5-years! i.e $10K Invested would be worth $300K+
Lesson: If you had the ability to look out over a long-term horizon (just 5-years), focus on the big picture and only fundamentals(!!)- you'll have caught a multi-bagger!
17/ Bottom-line on $ETSY:
$ETSY offers:
✅Superior Brand Recognition
✅High Network effects
✅ High ROE
✅Operating leverage
✅e-Commerce is still early
✅$ETSY's story feel young
✅Practice patience, perspective + focus on fundamentals.
Thanks for reading.
$ETSY offers:
✅Superior Brand Recognition
✅High Network effects
✅ High ROE
✅Operating leverage
✅e-Commerce is still early
✅$ETSY's story feel young
✅Practice patience, perspective + focus on fundamentals.
Thanks for reading.
Thanks Max for inviting me @MaxTheComrade @WOLF_Financial
It was great to listen to you folks! @AnthonyOhayon @borrowed_ideas @EugeneNg_VCap @plantmath1 @clueless_1337 @StockMarketNerd @7investing
Kindly share if this was helpful. Cheers again and have a good day.
It was great to listen to you folks! @AnthonyOhayon @borrowed_ideas @EugeneNg_VCap @plantmath1 @clueless_1337 @StockMarketNerd @7investing
Kindly share if this was helpful. Cheers again and have a good day.
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