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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.

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Equity Bottom-Up

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<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

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

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52-week Range

Market Cap (USDm)

P/E

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