During the coronavirus crisis, the online platform Etsy was one of the clear winners: While many traditional business models had to struggle with enormous headwinds, digital business models experienced a real sales boom. This was also the case with the internet platform Etsy, where sellers and buyers of handmade products meet. The pandemic made it clear that the company could successfully establish itself against the „Amazon Handmade“ platform. In 2020, sales more than doubled.

Since then, however, growth rates have dropped significantly, which can also be seen in the share price. While the papers were quoted at just under 300 dollars in November 2021, investors can now add a share to their portfolio for around 87 dollars.

Etsy, a leading online platform for handmade products, was founded in 2005 as an e-commerce website for buying and selling handmade products, vintage and artist supplies. The headquarters is located in the New York City borough of Brooklyn. The range of handmade products includes art, photography, fashion, jewelry, cosmetics products and toys. To be considered „vintage“, offered items must be at least 20 years old.

In addition, various seller services are offered, including Etsy Payments, the advertising platform Etsy Ads and Etsy Shipping Labels.

Revenue increases by 7% The recently published results slightly exceeded the expectations of analysts: Overall, goods worth 3 billion dollars changed hands (+1.2% vs. Q3 2022). At Etsy itself, revenue increased by 7% to 636 million dollars. This exceeded the analysts‘ forecasts by 5.9 million dollars (source: Seeking Alpha). The increase in revenue is mainly due to the increase in the transaction fee or the fee a company has to pay for each customer payment from 5% to 6.5%.

Etsy with growth in customer numbers Now for the user numbers: The number of active buyers (with purchases within the last 12 months) increased by 4% year-on-year to 91.6 million. The number of reactivated buyers (note: buyers who had not been active for a long time) improved by 19% to 6 million.

Etsy can increase profit margins The online platform is also making progress in terms of profitability: Etsy achieved a adjusted profit before interest, taxes and depreciation of 182 million dollars. For comparison: In the previous quarter, it was only 162 million dollars. Accordingly, the EBITDA margin was improved from 28.2% to 28.6%.

Company management is using the red pen For the rest of the year, the company management is cautious. The volume traded over the platform is expected to decrease in the low single-digit range year-on-year. The adjusted EBITDA margin is expected to be between 26 and 27%.

At the same time, the tech company is relying on a rigorous cost-cutting program to increase efficiency sustainably. As part of the restructuring plan, Etsy is parting with around 11% or a total of 225 employees. However, costs of around 25 to 30 million dollars are likely to be incurred for this at first.

Analysts remain cautious When looking at the current reports of the analysts, the picture is very mixed. Of the 33 analysts who deal with the stock, only 15 recommend buying the papers. Another 13 bankers see the stock as a hold position, while 3 experts even recommend selling (source: marketwatch.com).

Based on the earnings estimates of 4.80 dollars per share (source: Seeking Alpha), the share is currently trading at 18 times the expected earnings for 2024. The range of target prices ranges from 45 to 125 dollars and differs significantly from the current share price of around 86 dollars.