For those investing online in the stock market few things can be more irritating than hearing after the fact that a company’s shares they haven’t been invested in have rocketed. By the time that’s happened to a company that hasn’t been on your radar the opportunity has probably been and gone. However, not always. Sometimes it’s worth examining if there isn’t a good possibility there is plenty more to come.
Almost everyone has heard of online retailing giant and media streaming service Amazon. Anyone investing online in the stock market has certainly heard of the company, which has been one of the biggest success stories in the world over the past couple of years. Less will have hear of Etsy, another online retailer but one with a more niche market of handmade and craft products. At 13 years old the company has been around for a little while now but a share price that had stagnated at a poor level since late 2015 had raised fears the company was not robust enough to carry on as an independent entity. Etsy looked like falling victim to the growing Amazon dominance of online retail.
However, in a little over a year, and following the appointment of Josh Silverman, a company turnaround specialist, to the board in May 2017, Etsy’s share price has more than triples. Mr Silverman seemed to have a magic touch during other roles at Skype, Ebay and American Express and that has now continued over to Etsy. It turns out that the retailer’s problems were less routed in the competition from Amazon as a poor website and digital marketing strategy. Buyers weren’t getting to the site in big enough numbers and when they did they weren’t finding the right products easily enough or being efficiently directed to others they might be interested in. Resources were also spread thinly to side-projects that weren’t contributing to the company’s bottom line.
A poor business model was also proving fatal. Etsy didn’t understand the power of discounting in retail and was charging the companies selling products over the platform far less than competitors. Re-focusing on the technology infrastructure and retail strategy has led to 3 quarters of quickly accelerating turnover. Silverman has balanced Etsy’s core artisan spirit with hard corporate realities that any listed company has to contend with.
But does the company’s share price have room for further growth following the recent surge? The company has forecast revenue growth of between 22% and 24% this year. It is hoped a 40% ramp up in marketing budget will deliver further growth. If current momentum continues, there could well still be plenty of growth left in this quirky online retailer.