How Etsy tripled its share price in Q2 2020 and is set to trade even higher
Mid-March, Etsy’s stock lost half its value. Thanks to its hand-crafted masks, the platform has since taken off in a big way, with target stock prices rising.
On 20 March, the Etsy share price bottomed out, with the hand-crafted e-commerce brand losing half its value amid fears that the coronavirus lockdown would hit consumer sales hard.
Since then, the only way has been up for Etsy's stock, as sellers switch towards manufacturing hand-crafted face masks for use during the pandemic and more buyers veer away from mass-produced goods towards unique, handmade items made with care by small businesses and one-man-bands.
Etsy share price bucks the trend in the coronavirus crisis
An analyst for Goldman Sachs recently increased their price target for the Etsy share price from $88 to $120 per share. This decision was based upon the huge rise in downloads of the Etsy mobile app, with the analyst citing a 'significant opportunity' for Etsy given that 'traditional retail remains less attractive' to shoppers.
RBC Capital Markets has also reported on the Etsy stock, raising its own price target from $79 to $117. It follows RBC’s own survey of consumers, which found that over four-fifths (82%) anticipated buying more goods from the Etsy marketplace next year.
Is the Etsy share price still a buy?
As the markets closed on 29 June, the price of Etsy’s stock was at an all-time high of $102.89 per share. Although it might not appear an ideal time to go long with Etsy stock as its already risen 130% this year, analyst forecasts suggest there is plenty of room for this stock to move further north into 2021.
RBC is confident that the consumer trends for bespoke, handmade goods will continue into next year, increasing its revenue forecast for 2021 by almost 10%. With year-on-year growth of 22% now anticipated for next year, it would appear that this year’s sales are sustainable.
Etsy’s focus on hand-crafted items instead of mass production is refreshing
The fortunes of Etsy changed almost overnight at the beginning of April amid fears of a huge downturn in consumer spending during the Covid-19 pandemic. However, Etsy’s sellers opted to hand-craft protective face masks for people worldwide, selling them in huge volumes. That month, more than 12 million face masks were shifted alone, at a value of £107 million.
Etsy’s CEO, Josh Silverman, labelled it an 'extraordinary month' and an example of 'the agility of [Etsy’s] marketplace'.
The Etsy platform welcomed four million new customers in April. Interestingly, just 25% bought face masks, with the remainder using the marketplace to purchase alternative handmade goods, many of which are personalised and unique.
RBC has subsequently labelled Etsy as 'one of the few structural winners' during the coronavirus crisis, and spoke confidently about the platform’s ability to prevail amid 'strong secular tailwinds'; such as the closure of brick-and-mortar competitors.
The Etsy marketplace is designed to make it easier for sole traders in jewellery, home décor, clothing, toys, crafts, and supplies to sell unique items online via their own optimised Etsy store.
How to trade the Etsy share price
If you feel that now is the right time to trade Etsy stocks, open a live trading or demo account with IG today. With your IG account, it’s possible to go long (buy) or short (sell) with the Etsy share price using CFDs and spread bets.
Start trading Etsy stocks today in these five simple steps:
- Create a new IG Trading Account or log in to your existing IG account
- Enter ‘Etsy’ in the search bar and select the stock
- Choose your position size
- Click ‘buy’ or ‘sell’ in the deal ticket
- Confirm your trade
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