Research from Water Tower Research, Water Tower Research

Water Tower Research

Research from Water Tower Research

Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

Equity Research Firm

Equity Bottom-Up

<ul>
<li>Etsy’s market is likely saturated. In a nutshell, that’s what the 4Q results suggest to us. On the call, the company stated ~75% of its gross merchandise sales (GMS) are from US-based buyers.</li>
<li>In the US, and much more so since COVID, awareness of what Etsy brings to the table has been especially high.</li>
<li>When we typically see increasing marketing costs, coupled with lower new buyer count and lower reactivated buyers as a percentage of an inactive base, those are signs of a market that is, at the very least, close to saturation, if it is not saturated already. </li>
</ul>


Etsy’s market is likely saturated. In a nutshell, that’s what the 4Q results suggest to us. On the call, the company stated ~75% of its gross merchandise sales (GMS) are from US-based buyers.
In the US, and much more so since COVID, awareness of what Etsy brings to the table has been especially high.
When we typically see increasing marketing costs, coupled with lower new buyer count and lower reactivated buyers as a percentage of an inactive base, those are signs of a market that is, at the very least, close to saturation, if it is not saturated already. 


Etsy, Inc. - 4Q Results in Line with Our Fears

<ul><li>We are initiating coverage of Etsy. In the first of a series of deep dives into the company’s key performance indicators (KPIs), in this report, we focus on whether Etsy.com can increase gross merchandise sales (GMS) again, which has been a key investor concern.</li><li>Growth likely to remain underwhelming mid-term.</li><li>Our analysis suggests that while Etsy’s GMS could very well start increasing in the near to mid-term simply because it has been declining for the past 11 quarters, except in 3Q23 when it increased 1% because of FX, but that growth is likely to remain tempered.</li></ul>

We are initiating coverage of Etsy. In the first of a series of deep dives into the company’s key performance indicators (KPIs), in this report, we focus on whether Etsy.com can increase gross merchandise sales (GMS) again, which has been a key investor concern.Growth likely to remain underwhelming mid-term.Our analysis suggests that while Etsy’s GMS could very well start increasing in the near to mid-term simply because it has been declining for the past 11 quarters, except in 3Q23 when it increased 1% because of FX, but that growth is likely to remain tempered.

Etsy, Inc. - Tough Times Likely to Continue; Initiating Coverage of Etsy

Independent research on the U.S. markets, Baptista Research

Baptista Research

Independent research on the U.S. markets

Baptista Research is an independent financial research house focused on the U.S. markets. We provide equity research as well as credit research reports on the top-listed U.S. companies with most of our focus on technology, consumer goods and services, automobiles, industrials, oil and gas, pharma, and healthcare. Our research has served more than 3000 institutional investors including mutual funds, hedge funds, banks, family offices, and various buy-side firms. We operate a research subscription service where institutions, as well as retail investors, can have priority access to all our research. We also have a wide distribution of our research reports across some of the top global financial platforms. Apart from equity research and credit research, we also provide advisory services with respect to mergers & acquisitions (M&A), private equity/ venture capital fundraising, valuation reports, and investment management services for corporates.
Baptista Research is owned and managed by Ishan Majumdar, an ex-Venture Capitalist/ Investment Banker, a Chartered Accountant, and a Masters’ degree holder in Management from HEC Paris. Ishan has nearly a decade of experience in Mergers and Acquisitions, Leveraged Buyouts (LBOs), Venture Capital Investing, Corporate Strategy, and Valuation in front-office roles at the likes of BNP Paribas CIB, Credit Agricole CIB, Groupe Danone, and TIW Private Equity. He has worked on and closed multiple acquisition deals, leveraged buyouts, and start-up investment transactions.

<ul><li>Etsy, the global marketplace for unique and creative goods, reported mixed results in its third-quarter 2024 financials, showcasing resolute management efforts amidst macroeconomic uncertainties.</li><li>The continued pursuit of differentiated customer experiences remains central to Etsy's strategy, although headwinds have temporarily impacted its growth metrics, notably the Gross Merchandise Sales (GMS).</li><li>Baptista Research looks to evaluate the different factors that could influence the company's price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.</li></ul>

Etsy, the global marketplace for unique and creative goods, reported mixed results in its third-quarter 2024 financials, showcasing resolute management efforts amidst macroeconomic uncertainties.The continued pursuit of differentiated customer experiences remains central to Etsy's strategy, although headwinds have temporarily impacted its growth metrics, notably the Gross Merchandise Sales (GMS).Baptista Research looks to evaluate the different factors that could influence the company's price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

Etsy Inc.: Leveraging Technology for Enhanced Discovery and Personalization! - Major Drivers

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>Last Friday, the S&amp;P Index Committee announced the changes to the S&amp;P500, S&amp;P400, S&amp;P600, and other indices, along with the result of a recent consultation on capping methodology.</li>
<li>The result is about US$23bn a side of flows for the major indices</li>
<li>In the S&amp;P500, DELL, PLTR, and ERIE are ADDs. AAL, ETSY, and BIO are DELETEs. But as always, just knowing the names is deceptive. The history matters more.</li>
</ul>


Last Friday, the S&amp;P Index Committee announced the changes to the S&amp;P500, S&amp;P400, S&amp;P600, and other indices, along with the result of a recent consultation on capping methodology.
The result is about US$23bn a side of flows for the major indices
In the S&amp;P500, DELL, PLTR, and ERIE are ADDs. AAL, ETSY, and BIO are DELETEs. But as always, just knowing the names is deceptive. The history matters more.


S&P 500/400/600 Changes - DELL, PLTR, and ERIE Added, AAL, ETSY, BIO Deleted

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

<ul>
<li>Constituent changes to the <a href="https://www.smartkarma.com/entities/s-p-500-index" target="_blank" data-smartkarma-citation="entities:22886:1" rel="noopener">S&amp;P 500 INDEX</a> and weight changes as a result of the market consultation proposals being adopted will result in a round-trip trade of US$31.5bn.</li>
<li>The largest one-way turnover is expected in the <a href="https://www.smartkarma.com/entities/consumer-staples-select-sector-spdr-fund" target="_blank" data-smartkarma-citation="entities:27536:1" rel="noopener">Consumer Staples Select Sector SPDR Fund</a>, <a href="https://www.smartkarma.com/entities/technology-select-sector-spdr" target="_blank" data-smartkarma-citation="entities:27543:1" rel="noopener">Technology Select Sector SPDR</a>, <a href="https://www.smartkarma.com/entities/materials-select-sector-spdr" target="_blank" data-smartkarma-citation="entities:27541:1" rel="noopener">Materials Select Sector SPDR</a> and <a href="https://www.smartkarma.com/entities/communication-services-select-sector-spdr-fund" target="_blank" data-smartkarma-citation="entities:27534:1" rel="noopener">Communication Services Select Sector SPDR Fund</a>.</li>
<li>The inflows to <a href="https://www.smartkarma.com/entities/apple-inc" target="_blank" data-smartkarma-citation="entities:666:1" rel="noopener">Apple (AAPL US)</a>, <a href="https://www.smartkarma.com/entities/palantir-technologies-inc" target="_blank" data-smartkarma-citation="entities:27728:1" rel="noopener">Palantir Technologies (PLTR US)</a> and <a href="https://www.smartkarma.com/entities/dell-technologies-inc" target="_blank" data-smartkarma-citation="entities:32189:1" rel="noopener">Dell Technologies (DELL US)</a> will add to the buying from the <a href="https://www.smartkarma.com/entities/s-p-500-index" target="_blank" data-smartkarma-citation="entities:22886:1" rel="noopener">S&amp;P 500 INDEX (SPX INDEX)</a> trackers.</li>
</ul>


Constituent changes to the S&amp;P 500 INDEX and weight changes as a result of the market consultation proposals being adopted will result in a round-trip trade of US$31.5bn.
The largest one-way turnover is expected in the Consumer Staples Select Sector SPDR Fund, Technology Select Sector SPDR, Materials Select Sector SPDR and Communication Services Select Sector SPDR Fund.
The inflows to Apple (AAPL US), Palantir Technologies (PLTR US) and Dell Technologies (DELL US) will add to the buying from the S&amp;P 500 INDEX (SPX INDEX) trackers.


Select Sector Indices: Inflows to Apple, Palantir, Dell Will Add to SPX Buying

United States

Etsy, Inc. provides e-commerce services. The Company offers handmade and vintage items, art, and supplies, as well as regular items such as clothing, housewares, paper goods, candles, bags and purses, music, and wood working items. Etsy serves users throughout the United States.

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Etsy Inc (ETSY US)

Etsy, Inc. - 4Q Results in Line with Our Fears

Etsy’s market is likely saturated. In a nutshell, that’s what the 4Q results suggest to us. On the call, the company stated ~75% of its gross...

Water Tower Research

Etsy, Inc. - Tough Times Likely to Continue; Initiating Coverage of Etsy

Our analysis suggests that while Etsy’s GMS could very well start increasing in the near to mid-term simply because it has been declining for the...

Water Tower Research

Etsy Inc.: Leveraging Technology for Enhanced Discovery and Personalization! - Major Drivers

Etsy, the global marketplace for unique and creative goods, reported mixed results in its third-quarter 2024 financials, showcasing resolute...

Baptista Research

S&P 500/400/600 Changes - DELL, PLTR, and ERIE Added, AAL, ETSY, BIO Deleted

The S and P Index Committee announced its September changes to the major indices on Friday along with changes to the Sector indices which means...

Travis Lundy

Select Sector Indices: Inflows to Apple, Palantir, Dell Will Add to SPX Buying

Constituent changes to the SPX and the market consultation proposals being adopted result in a round-trip trade of US$31.5bn. Apple and...

Brian Freitas

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