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Etsy Stock Impresses with a ~181% Rise So Far in 2018

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Dec. 13 2018, Updated 3:44 p.m. ET

Why Etsy stock is soaring

Online retailer Etsy (ETSY) has risen an astonishing 180.8% to $57.43 on a year-to-date basis as of December 12. The company’s strong financial performance in the first three quarters and its formidable position in the online handcrafts market are driving its stock.

In each of the trailing three quarters, Etsy has topped the estimates for sales, and it’s missed estimates for adjusted EPS just once.

Meanwhile, Wayfair (W) stock has risen ~34.4% so far in 2018. The company’s impressive top line growth in the first three quarters of 2018 and its solid growth opportunities in the online home goods market are driving its stock.

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On the other hand, Overstock (OSTK) has fallen 70.1% in the year as of December 12. The ebbing cryptocurrency craze and the muted financial performance of the company’s retail unit have kept investors cautious. According to reports, Overstock CEO Patrick Byrne has set February as the deadline for the company to sell its retail operations to fund its blockchain initiatives.

What’s driving Etsy?

Last year, Etsy took on measures such as cost cutting, the revamping of its management, and heavy investments in improving its digital platform. It also established four key growth strategies: improving trust and reliability for buyers, investing in marketing capabilities, providing buyers and sellers with new tools, and improving search and discovery on the platform. These initiatives have led the company to a strong financial performance and, in turn, an impressive stock price trajectory.

Etsy recently bumped its seller transaction fees to 5.0% from 3.5%. It’s looking to accelerate its investments in marketing and product innovation following the fee hike. Etsy’s management has also raised its guidance for 2018. Management now expects revenue growth of 35%–36% compared to its earlier guidance of 33%–35%.

Etsy started as a seller of craft and vintage items. Over time, it’s added several other categories to its online platform. However, its strength in vintage crafts and goods is its tour de force and has helped it to fend off stiff competition from Amazon Handmade.

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