– A high-quality business with high margins, strong cash flow, and potential for future margin expansion as the business grows.
– Unlike other covid beneficiaries, ETSY is likely to keep the gains it experienced during the pandemic.
– Strong network effects.
– Set to benefit from continued commerce shift online.
– Currently trades at only 20x FCF.
– With mid-single-digit growth, a slight increase in the take rate, and some incremental margin leverage the stock is expected to compound at double-digit rates moving forward.
– Trades at 2021 FCF field of almost 5% – too low for capital light and cash generating platform.
– A valuation of $300/share was egregious on the upside, but a price of $100 or less has gone to the other extreme.
Exp. gain: Not specified.
Full ETSY write-up (free guest account required):