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In this clip from “The Rank” on Motley Fool live, recorded on February 7Motley Fool contributors Matt Frankel, Jason Hall and Taylor Carmichael discuss the market giant that continues to impress and has mastered the art of differentiation.
Matt Frankel: If you’ve been following, you know our number 1 is Etsy (NASDAQ: ETSY), ticker symbol ETSY, has been a fantastic performer since around 2015. The stock has risen more than tenfold. If you remember when Amazon (NASDAQ: AMZN) came out with Amazon Handmade and Bloomberg actually published an article saying an Etsy killer was coming to market and the stock was crashing. They were a fantastic performer. They just proved all the analysts wrong. They have done a great job of growing in their addressable market. They now have over $12 billion in gross merchandise sales on an annualized basis and it continues to grow. Their recent growth figures are somewhat misleading. Over the past year, their revenue has grown 24%, excluding face mask sales, something they’ve pivoted to during the COVID pandemic. But that’s on top of a big pop they had two years ago when the COVID pandemic first hit. So many people have had so much more time to shop online. Over the past two years, their revenue has more than doubled, up 138%. They have done a great job of growing their addressable market. A statistic I’ve quoted quite often when talking about Etsy is that they estimate their total addressable market at $100 billion for specialty products, which I mentioned have about $12 billion in annualized revenue or annualized merchandise sales. They put that at $250 billion across all of their online spend categories. And, if you include specialty merchandise sold like craft markets and non-online sources, they put their addressable market at $1.7 trillion. This is for Etsy. That doesn’t include some of these other brands that they build. When you see that, you say “Wow” like Taylor just did. But then you realize they added Reverb, which is the music marketplace they acquired. They added Depop, the fashion resale brand, which is very popular with younger generations. They added Elo7, which is widely considered the Etsy of Brazil and is growing very rapidly. E-commerce in Latin America is expected to grow at an annualized rate of 21% through 2025. There’s a lot of potential there for it to be a big hit and they acquired Elo7 for something like $100 million, some very low thing, in the context of this stuff. I think they are all making the right choices. They have shown their ability to grow. They have shown that what they have is something special. Few companies can compete with Amazon like they have and clearly win. Normally the best you can do against Amazon is to coexist like walmartit’s (NYSE: WMT) Make. Etsy came up and knocked it out of the park. I don’t know if you’ve ever purchased from Amazon Handmade. I don’t know of anyone who owns or sells them. But they totally went against Amazon and won, and their management is making big decisions.