Since January 2023, the Nasdaq Composite has risen 55%. Investor optimism has driven this tech-heavy benchmark to record high. Not many companies benefited from the big surge. Solid market deals are still available to investors. One great growth stock is a good buy for long-term investors.
Long-term play Investing successfully requires a five- or 10-year timeframe. With this context, Etsy (NASDAQ: ETSY) warrants a deeper study. To clarify, the online economy for handmade goods has slowed. The platform's gross merchandise sales (GMS) were $13.2 billion in 2023. That was similar to 2021.
The pandemic boosted demand, but things have cooled. Regular in-store shopping has resumed. Additionally, inflationary pressures hurt Etsy, which offers many discretionary items. These issues explain why shares have plummeted. Their current pricing is 77% below their high.
However, investors who can see forward have hope. Three reasons make me optimistic about this company. Etsy's success in the competitive e-commerce market should delight investors. The management team claims 83% of buyers feel the site provides exclusive products. This shocking statistic shows Etsy's industry relevance. It distinguishes the company.
Another incentive to acquire Etsy shares is its strong network effects, which maintain its economic moat. The marketplace has 96 million buyers and 9 million vendors worldwide in 2023. These numbers increased from a year ago and are far higher than pre-pandemic levels.
The platform grows more valuable to existing users as more users join. Sellers have more customers and purchasers have more shops. Finally, Etsy's steady profitability makes it a good buy. Recurring profits have been generated by this scaled, asset-light company strategy. Operating margin has averaged roughly 17% for Etsy during the past five years.
Potential for good returns Consider adding this stock to your portfolio now due to low expectations. Shares trade at a 14.4 ahead P/E. Today's crazy market makes it hard to locate a deal like this for a solid business like this.
I believe Etsy will recover its GMS, sales, and profit growth. The stock price may rise. Etsy benefits from the growth of internet purchasing in developed and emerging nations. Entrepreneurship is also rising, which can assist the business recruit more vendors. Small business help is gaining popularity among customers. Over the next five years, Etsy may be a good investment.
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