Today I am opening my 8th trade of the year in what has so far been a good year. As is always the case, you can see past 2016 (and previous years) trades here:
http://www.intelligentspeculator.net/livetrades
Let’s start off by looking at the numbers:
| Ticker | Name | Price | PE Ratio | PE Next Year | Return YTD | Sales Growth | Analyst rating | Book Value | Beta | Revenue/Share | Sales 5Y Avg Growth | EPS 5Y Avg Growth |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ETSY | Etsy Inc | 10.66 | N/A | 38.73 | -9.25 | 33.44 | 3.67 | 2.97 | 1.88 | 3.21 | N/A | N/A |
| AMZN | Amazon.com Inc | 848.91 | 173.36 | 44.97 | 13.76 | 27.08 | 4.74 | 40.43 | 1.21 | 286.89 | 20.24 | 53.25 |
Revenue growth for Etsy is quickly declining to AMZN’s levels despite being much smaller:
Here are the Google Trends charts:
AMZN
ETSY
credit: Google Trends
How is it that Etsy, the much smaller player in a fast growing ecommerce sector isn’t growing much faster than AMZN? To me that is a tremendous warning sign.
Long Amazon (AMZN)
A few days ago I published a lengthy post about why I think despite its difficult valuation, AMZN is a must hold. I do recognize it will have its share of volatility, especially in shorter term periods but I think it’s a guaranteed (or as close to it as you can get) long term winner, you can read the full post here
http://seekingalpha.com/article/4049918-amazon-nearly-impossible-value-yet-remains-strong-buy
Next earnings: April 27th
Short Etsy Inc (ETSY)
I just closed a trade on ETSY after very disappointing earnings for Q4. I continue to be highly skeptical of ETSY’s current valuations, I don’t think it will be able to compete with the likes of AMZN and while it targets a different customer segment in many ways, AMZN has a tremendous effect on ecommerce in general putting high standards in terms of shipping, ecommerce, etc. That is putting pressure on smaller retailers like ETSY and I don’t think it can live up to its current valuation.
Next earnings: May 2nd 2016
