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ETSY - ETSY.com


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Not as compelling anymore after the 20% bump on talk of them exploring "strategic alternatives", but I've been looking at Etsy the past few weeks. And since Greenhaven Road wrote it up in their recent letter, figured it might be worth a post. Here are some quick thoughts:

 

Pros

  • Defensible against Amazon
  • Differentiated products that are not easily replicated by a competitor (i.e. not competing on price)
  • Fast growing seller services business (shipping labels, payment processing, paid promo listings
  • Capital light business model which should scale very nicely
  • Double digit growth with more runway
  • Sticky seller platform
  • Most growth is organic

 

Questions

  • At what point does operating leverage ramp?
  • When will they show profit/consistent FCF?
  • Will they get acquired?
  • What will new management do?
  • What's the TAM?

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  • 1 year later...

Well this was on my list.  Greenhaven Road has had immaculate timing for years now.  Pretty amazing.

Yep, it is quiet amazing how well he has been doing with a lot of his public picks. Just not sure if he's doing right in following Dane Capital in these SPAC investments. And RMG (which I believe he also found through his network I believe) was also crap. But Fiat, Ibkr, Trip, Etsy, Diamond Resorts, Fortress... Wow.

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RMR worked out pretty ok for me. 

 

I don't clone, but i do try to reverse engineer.  Sometimes it is hard to understand the rationale.  But then again, I may not have the same understanding of the business that he may have. 

 

 

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  • 1 year later...
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  • 6 months later...

What do you think is protecting this company from a similar fate to ebay? Not saying Ebay is dead per-se, just growth slowing substantially. Also, I recognize that they are very different businesses too. Just asking for people's opinions.

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8 hours ago, Jmac42600 said:

What do you think is protecting this company from a similar fate to ebay? Not saying Ebay is dead per-se, just growth slowing substantially. Also, I recognize that they are very different businesses too. Just asking for people's opinions.

Etsy is already in danger to go in that direction. Recently I saw more and more items that were sold by Aliexpress. I hope that they add more moderators or else I see real dangers for the long term growth of Etsy (love the business).

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6 hours ago, MattR said:

Etsy is already in danger to go in that direction. Recently I saw more and more items that were sold by Aliexpress. I hope that they add more moderators or else I see real dangers for the long term growth of Etsy (love the business).

Yes, my wife is a user of Etsy and said the same thing. More and more generic items from chinese sellers are in their platform. This dilutes their offering and brand.

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4 hours ago, Spekulatius said:

Yes, my wife is a user of Etsy and said the same thing. More and more generic items from chinese sellers are in their platform. This dilutes their offering and brand.

This is a real danger. Ebay dropped quite fast here in Austria due to mass amount of chinese sellers and I start to see more people ordering from other places than Amazon for the same reason.

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