A few thoughts on Etsy leading up to the earnings announcement.
I read an article on Amazon Handmade roughly around October 16th stating that at the time Handmade had 80,000 products listed. As of today, Handmade has 160,000 products listed, a 100% increase in 15 days. This indicator seems quite low and the on-boarding of Etsy customers to Amazon seems slow and a major turnoff seems to be their high selling expenses.
Over the same time period Etsy has increased their products to 36 million or 13.5% from their mid October number. Also, Etsy's web traffic has slowly increased over the past 2 months suggesting that Handmade is pulling away less customers than most have assumed. A quick glance at Alexa.com will show the improvement of Etsy's web traffic (these are very high level statistics).
Furthermore, let's not forget comments from Google's Chief Business Officer stating the affects and return on their new deep linking update. Omid Kordestani -“Developers like Etsy are already seeing a boost in traffic as a result of deep linking,” Kordestani said.
Wedbush did in fact upgrade Etsy on October 20th but still holds a $9 price target. Overall, I am on the fence on whether Etsy is a buy at these levels. I would need further examination of their quarterly marketing spend which has been stated to have increased sharply. For one, I can confidently say the Amazon Handmade is not going to pose a risk on Etsy's earning for this quarter. Moving forwards and when Amazon opens up more product categories, we may see a larger impact to shares.
