Shares of Etsy (ETSY -7.70%) soared on Monday, in what was perhaps a delayed reaction to positive quarterly earnings reported last week. As of 3:30 p.m. EST, Etsy stock was up 12%.
On Thursday afternoon after the market closed, Etsy reported fantastic results for the fourth quarter of 2020. However, the stock didn't do much in response, likely because of market sentiment that day. Many growth stocks sold off during this past week and struggled to find their legs even on Friday. Etsy seemed to be among the stocks in this crowd.
For 2020, Etsy's revenue was up 111% year over year to over $1.7 billion. And its net income for 2020 was up 264% compared to 2019 to $349 million. Those are blockbuster numbers that typically garner a positive reaction from the market. With the market rising today, Etsy stock got the pop you would have expected last week.
When investing in stocks, it's good to look past daily price movements and even single quarterly reports. As we've seen, how a stock reacts in a given day can be unpredictable. Etsy stock probably should have jumped Friday, but general market fears likely held it back. Today, now that Wall Street is a little more optimistic, Etsy is enjoying its moment in the sun.
It's more important to look past short-term factors and try to spot long-term developments. And to me, Etsy's Q4 report was stuffed with encouraging trends. For example, some investors think that Etsy's booming revenue is temporarily being fueled by pandemic face mask sales. However, consider that in Q4, non-mask sales processed on the platform were up 118% to $3.3 billion. This incredible growth (far removed from the start of the pandemic and sans face mask sales) seems to signal far more than a temporary boost to Etsy's business.