Etsy (NASDAQ: ETSY) Shows No Signs Of Slowing After Record Black Friday

Retailers look forward to few days in the year more than the day after Thanksgiving, known traditionally as Black Friday. It’s a date that’s marked on many household calendars as the day to do all your shopping for the holiday season and to pick up a few bargains along the way. Even with prices slashed and bargains going left, right, and center, the retailers still make a ton of cash and investors are always happy to back them.

These investors in retail have, for the most part, had a record 2020 already. This is particularly true for investors in the e-commerce stocks, who have benefited mightily from the coronavirus pandemic. Among them, few have reached the heights that Etsy (NASDAQ: ETSY) has already.

Sizzling Growth

The New York-based company, founded in 2005,  provides an online marketplace for individual retailers to sell their goods, with a focus on handmade and craft items. While they’d performed well in recent years, shares had bobbed along sideways from March 2019 to March of this year. They then took the same beating that was handed out to almost every other stock by COVID-19, but investors quickly picked up on the coming shift to e-commerce and were already piling in by the end of that month. Going off Friday’s close, they’re now up more than 440% since the lows of Q1, and show no sign of slowing down just yet.

With the holiday season only truly starting to kick off now, there’s a lot more of that hype coming down the line which should provide more than enough fuel to keep the rally going. The stock has had two 20% plus drops in the last two months which means Friday’s all-time high hasn’t even put shares into overbought territory.

Friday’s jump of 10% by itself should tell you all you need to know about how hungry shares are for even more road. Early reports suggest consumers spent somewhere around $9 billion on the day after Thanksgiving last week, which would mean an increase on last year’s spend by 21%. This makes it one of the largest online spending days ever, second only to last year’s Cyber Monday. With that kind of momentum, who’s willing to bet that today’s numbers won’t eclipse that as well? Already analysts are looking for upwards of $13 billion to be spent by the end of today which would be around a 35% jump on 2019’s number.

Looking Ahead To 2021

It will be interesting to see how these numbers trend in the next year or two, when (hopefully) COVID-19 will have receded with the coming release of a widely available vaccine. There’s no doubt that its presence has played a massive role in the boom in e-commerce spending this year, with Friday’s numbers suggesting that foot traffic to brick and mortar stores was down 50% on last year.

So for Etsy, the hype around e-commerce has certainly played a role in the stock’s performance this year, but the company has also been able to walk the walk with their numbers. Their Q3 numbers from the end of October smashed even the high end expectations, with revenue up a sizzling 128% year on year. For investors who’ve been on the sidelines and are thinking about getting in at these heights, it’s important to remember that a lot of this growth has been both sticky and sustainable.

As CEO Josh Silverman said with last month’s report; "we've been able to sustain growth by driving retention and frequency of our existing buyers as well as becoming an important shopping destination for new buyers. While early, our incremental investments in product and marketing - specifically focused on search and frequency - are driving improvements in the customer experience."