Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Why Etsy Stock Was Gaining Today

By Jeremy Bowman - Jan 12, 2021 at 1:24PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Strong search growth on the site seemed to lift the e-commerce company.

What happened

Shares of Etsy ( ETSY -2.78% ) were climbing today, although there was no major news pushing the stock higher. On a flat day for the market, a number of growth stocks surged, potentially in hopes of a multitrillion-dollar stimulus package once Joe Biden becomes president, as he has already proposed. Additionally, in a blog post about Valentine's Day, Etsy reported a number of impressive growth figures around searches in the last three months. 

Since the company hasn't yet provided a holiday update, investors may be responding favorably to those search figures as they're looking for hints into holiday performance.

The stock was up 13.4% as of 11:58 a.m. EST on Tuesday.

A Valentine's Day card on Etsy

Image source: Etsy.

So what

The fourth quarter is historically Etsy's strongest, since much of the company's business comes from gifts, and investors are eager to see results from the holiday period after analysts projected revenue to jump 88%.

Etsy's search results show that demand on the platform has remained strong over the past three months. During that time, searches for Valentine's Day cards are up 38%, a sign the company is gaining significant share in the greeting card market. It also had a 1,183% jump in cocktail DIY kits, likely a popular gift during the holidays with bars and nightlife generally off-limits.

And searches for personalized pet items were up 85%, while searches for bath bombs and salts jumped 163%, another trend likely driven by spending more time at home.

Now what

Macro-level data has shown that e-commerce sales jumped during the holidays. Mastercard SpendingPulse said online sales jumped 49% from Oct. 11 to Dec. 24, the period making up most of the fourth quarter. It also reported that e-commerce sales rose from 13.4% of total retail sales in that period in 2019 to 19.7%.

Etsy shares just wrapped up a phenomenal 2020, with the stock quadrupling. And the combination of a friendly market environment and an ongoing pandemic, as well as positive search data going into the new year, seems to have investors feeling bullish on the stock again.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Etsy, Inc. Stock Quote
Etsy, Inc.
ETSY
$224.90 (-2.78%) $-6.43
Mastercard Incorporated Stock Quote
Mastercard Incorporated
MA
$333.33 (3.48%) $11.22

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
624%
 
S&P 500 Returns
140%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/07/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.