Greenhaven Road Capital recently published its Q4 Investor Letter (you can download a copy here). The letter discussed the hedge fund’s investment thesis on the top five positions, including Etsy Inc (NASDAQ:ETSY). Etsy is a $2.6-billion market cap company that operates a global online marketplace for creative entrepreneurs to for buying and selling of handmade/vintage items and unique factory-manufactured items. In this article, we’re going to take a look at Greenhaven’s thoughts on Etsy.
The thesis here is unchanged: Etsy is a valuable two-sided marketplace providing value to merchants who can sell items on an inexpensive platform and consumers looking for a more personal alternative to Amazon. The company has become increasingly focused on profitability and has dropped numerous projects that were not core to providing a better product for creative entrepreneurs (sellers) or buyers on the site. Further, they have restructured engineering resources to allow for faster innovation. Etsy’s decision to drop their in-house CRM (customer relationship management) software and transition to Salesforce is an example of this reorientation.
Similarly, they will migrate from three internally operated data centers to Google Cloud, which brings cost and functionality advantages. All of these changes seem quite positive as it is hard to argue that Etsy should be running its own data centers. In his book “Good to Great,” Jim Collins has a notion that to transition from good to great, there is a flywheel that starts slowly and through consistent small actions momentum is built. It appears Etsy’s CEO is committed to a more focused and efficient enterprise, and each one of these actions is a push on the flywheel. It will be interesting to see how much momentum the company can generate.
Etsy Inc (NASDAQ:ETSY) operates an e-commerce website for buying and selling handmade and vintage items. For the third quarter ended September 30, 2017, the company reported total of $106.4 million, up 21.5% year-over-year. Net income for the quarter was $25.8 million, or $0.21 earnings per share, versus a net loss of $2.4 million, or $0.02 loss per share, for the same quarter of the year before.
Shares of Etsy have moved up 4.55% since the beginning of the year, while the share price has jumped more than 65% over the past 12 months. The stock has an average rating of ‘Hold’ from analysts polled by FactSet.
Meanwhile, Etsy isn’t a very popular stock among hedge funds tracked by Insider Monkey. As of the end of the third quarter of 2017, there were 29 funds in our database with positions in the e-commerce company, including Conatus Capital Management and Hawk Ridge Management.