Morgan Stanley analyst makes a bullish case for Etsy after strong Q2 results

Etsy Inc (NASDAQ: ETSY) reported market-beating quarterly results on Wednesday, but the stock opened about 15% down this morning as investors focused on the number of active buyers that grew less than expected.  

Second-quarter financial performance

Etsy earned $98.3 million in the second quarter (68 cents per share) versus the year-ago figure of $96.4 million (75 cents per share). It generated $529 million of sales that represent an annualised growth of 23%. According to FactSet, experts had forecast $526 million of sales and 64 cents of EPS.  

Are you looking for fast-news, hot-tips and market analysis?

Sign-up for the Invezz newsletter, today.

Etsy added 11.9 million new buyers to its marketplace, including ones that returned to the platform after at least a year. The eCommerce company concluded Q2 with 90.49 million active buyers that translates to year-over-year growth of 50% but falls short of the FactSet consensus of 91.05 million. New buyers in the recent quarter were almost double compared to the 2019 equivalent.

The earnings report comes shortly after ProShares Advisors’ Simeon Hyman said in the eCommerce space, Etsy stock was worth investing.

Lauren Schenk’s comments on CNBC’s “TechCheck”

Etsy benefitted greatly from the COVID-driven boom in eCommerce, with the stock exploding nearly 500% since March 2020. Morgan Stanley analyst Lauren Schenk, however, is confident that Etsy will continue to thrive after the pandemic and the recent dip in its share price makes up for a good buying opportunity. In her interview with CNBC’s “TechCheck”, she said:

“While net adds did turn negative in the quarter, Etsy did acquire nearly 40 million new buyers to the platform last year. That’s one of the largest numbers we’ve seen across eCommerce broadly. While tough comparisons are weighing on interim results, we do think the structural top-line growth is more durable from here.”

Etsy has been on an acquisition spree, having bought Depop, Reverb, and Elo7 recently. The M&A strategy, as per Schenk, is building a house of brands which “could be an interesting strategy for the next several years”. She upgraded Etsy to ‘equal weight’ on Thursday.