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3 Stocks That Just Crushed Earnings

By Jennifer Saibil - Mar 4, 2021 at 7:48AM

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All of these companies should keep it up in 2021.

The economy showed new life last week when several companies reported better-than-expected earnings. Airbnb (ABNB -5.16%), Wayfair (W -9.57%), and Etsy (ETSY -2.13%) are on track to keep crushing sales, and all of their stocks' prices jumped on their respective earnings news. Let's see why you can expect them to keep gaining.

1. Airbnb: Itching to get out

That's how I would describe most of us who have been cooped up at home over the past year. Airbnb decided to go public at probably the worst time in the history of its business, with a 30% year-over-year decline in sales in 2020.

Two young people sit in a triangular tent on the side of a cliff.

Image source: Airbnb.

Investors were keen enough to bid the price of the stock up more than 100% from the IPO price before the first day of trading. And it's continuing to climb, gaining 40% so far in 2021. 

Revenue and gross booking value slid over the prior year again in the fourth quarter, but both showed improvement, declining 22% and 31% respectively. That was better than expected, and not too shabby considering the climate. Net loss was $3.9 billion, which included $2.9 billion in stock-related expenses. Adjusted EBITDA (earnings before taxes, depreciation, and amortization) improved from a $276 million loss to a $21 million loss.

Investors are confident for good reason. A company survey indicated that more than half of respondents were planning a trip soon, and informal research points to a similar conclusion. 

Airbnb focused on becoming more efficient during the pandemic, streamlining operations to cut expenses, and for 2021 it's renewing its core commitment to hosts and customer service. The company expects a sales decline in the first quarter that's narrower than the fourth quarter, but the situation may not materially change while the pandemic is still strong.

2. Wayfair: Spending on furniture instead

2020 was Wayfair's year. Doomsday analysts said the price was too high as the price surged after a challenging 2019. The stock ended 2020 up 140%, but a solid fourth quarter pushed the stock even higher.

The online furniture retailer was poised to succeed during the pandemic, and revenue surged throughout. In the fourth quarter ended Dec. 31, revenue increased 45%, which was a bit less than management anticipated, but gross margin of 29% beat expectations. Earnings per share came in at $0.23, an improvement from a $3.54 loss in 2019.

A woman reading on a white couch.

Image source: Getty Images.

There were 31 million active clients in Q4, a 54% increase over the prior year, and revenue and orders per client slightly increased. As usual, repeat customers played a starring role, with a 56% increase in orders. Mobile was also an important part of the whole, accounting for 60% of orders.

Wayfair's sales of $14 billion are a fraction of a total $840 billion home improvement market that it sees growing to $1 trillion by 2030. Online penetration in the home category jumped from 14% to 21% in 2020, powered by the pandemic, and the company sees itself growing to eight times 2020 sales in the next 10 years.

3. Etsy: Discovering custom products

Etsy, an online platform for custom and exclusive goods, was another pandemic winner. And the fourth quarter was another outstanding one, with 129% revenue growth and 118% gross merchandise volume growth.

A woman painting and using a computer

Image source: Getty Images.

This was the year Etsy went mainstream, and CEO Josh Silverman pointed out that customers are now turning to the platform for their everyday needs. Active buyers, who are defined as making one purchase during the year, grew 77% to 81 million. Repeat buyers, who made two purchases over the past 12 months grew 97%. And habitual buyers, who have made more than six purchases over the year, grew 157%. Gross merchandise sales (GMS) per buyer increased 22%. For perspective, Etsy's growth outpaced overall e-commerce growth (as recorded by the census bureau of the Department of Commerce) by 2.5 times, even after backing out sales of face masks.  

The company sees a $1.7 trillion addressable market, and it's working on improving the user experience and relationships with manufacturers.

Etsy expects similar numbers in Q1, with 115% to 125% GMS growth and 125% to 135% sales growth. Its shares gained 301% in 2020 and is already up 21% in 2021.

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Stocks Mentioned

Airbnb, Inc. Stock Quote
Airbnb, Inc.
ABNB
$89.08 (-5.16%) $-4.85
Wayfair Inc. Stock Quote
Wayfair Inc.
W
$43.56 (-9.57%) $-4.61
Etsy, Inc. Stock Quote
Etsy, Inc.
ETSY
$73.21 (-2.13%) $-1.59

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

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