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
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.
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!
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.
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!
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!
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
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!
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:
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.
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.
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!
*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
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!
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.
Primer on How Investors can build an AI Portfolio to capture the $13T Opportunity from Artificial Intelligence by 2030.
Mega Thread //
• A Framework for evaluating AI Companies
• Top Companies that will continue to dominate
• First Principles basics on AI
Let's Review⬇️🧵
* Disclaimer: Not advice
1/Some context - This is a follow-up to a Twitter spaces with some brilliant folks:
Thread Outline:
• Foundational elements
• Debunking AI
• My framework for structuring an AI portfolio
• My Top Companies to watch
• Market Opportunity
• Summary
🔽
2/ What's AI?
Debunking it - AI simply involves training a complex system with huge amounts of data using algorithms (instructions), then using that trained system to make predictions about new data it has never seen.
Below is a break-down of the types (ML & NLP are common)
Why I've been bullish on this leader in AI disrupting the Trillion-dollar Consumer Lending Market!
✅What is so special?
✅What are the Competitive advantages?
✅ $LMND of Lending?
Let's explore in this deep thread👇👇
1/ Thread Overview:
2- Company Overview
4-Competitive advantages & Emerging Moats
5 -Financials & Customer Growth
7 - Market Opportunity
8 - Management Team 9- The bear thesis & Risks
2/ $UPST Overview:
A lending platform that applies AI & machine learning to improve the consumer lending and underwriting process for making effective credit assessments.
They help their bank partners by referring loans, creating a seamless and simple consumer facing app.
• What are the differences vs similarities btw both companies?
• 🚨Revenue Growth rates over 281% & 152% respectively
• What are the risks of Investing? Can we trust both?
• $FUTU Earnings Recap
• Are they worth it?
Biz Thread below👇
0/ Thread Overview [Skim to your sections]
1: Financials Overview
2-3: $FUTU vs $TIGR Competitive advantages
4-5: Financial Analysis Summary
5-6: Management Teams
8: The Risks to Weigh
10: Industry and market Opportunity
1/ Company Overview: Super easy, nothing much.
$FUTU & $TIGR - Platforms that enables buying & selling of equities.
Key Highlights:
✔️Q4-2020 Revenue: Actual $139M vs. Est. $130M (53% YoY Growth) (7% Surprise)
✔️EPS: Act. $0.10 vs Est. $0.12
✔️Q4- GAAP Ops. Income Margin of 21% and Adjusted Margin of 45%
✔️FY 2020: 63% YoY Growth
This is a Top-class company-✅🔥
Part 2 - $ZI
- Cash flow from operations of $169.6 million, and Unlevered Free Cash Flow of $243.7 million.
- $ZI closed the year w. >20,000 customers, including more than 850 customers with $100,000 in annual contract value
- FY 2021 Guidance below
Part -3: - $ZI
* I may start another position again as I sold my position a few weeks ago.
- Top-line Revs growing >50% consistent
- High gross and ops margin
- Founder-Led with three awards for 2020 culture & placed No. 15 on for Best Company Culture
- Moat within sales teams