Etsy is “Crafting” Its Way Higher: RBC

Shares of Etsy are up 120% year-to-date, benefiting from a herd of consumers that rushed to the e-commerce company’s website for masks and other goods. With expectations that many of the new buyers who purchased from Etsy for the first time will become repeat customers, RBC analyst Shweta Khajuria raised her price target for the stock to $117, up from $79, on Monday evening.

Mask bump: In April, Etsy acquired 6.5 million buyers, 4 million of which were first-time buyers, and 2.5 million buyers who had not purchased for more than a year.

• Mask math: Etsy sold 12 million masks in April, resulting in gross merchandise sales of $133 million. RBC estimates that 25% of the 4 million new buyers bought masks.

Sticking with Etsy: A key question investors are asking is whether Etsy can retain the new cohort of Etsy shoppers. RBC estimates that at least 40% of the 6.5 million new buyers should return in the next twelve months.

Impact of retail openings: E-Commerce companies will see a slowdown in growth as physical retailers open their doors, but the 3-month lockdown was significant enough to create a long-term change in purchase behavior. RBC’s annual eCommerce survey, found that 54% of respondents who had shopped online believed the pandemic will cause them to permanently increase their willingness to purchase Online vs. in-store. Khajuria says this is enough to offset headwinds from the return of physical stores.