Do Etsy Shares Deserve To Dip Under Threat Of Amazon Competition?

Etsy Inc ETSY has demonstrated some major resilience over the past two years in the face of increasing competition from Amazon.com, Inc AMZN. When Amazon first announced its entry into the handmade goods business, many traders feared the worst for Etsy. However, up to this point, Amazon still hasn’t gained major traction in the handmade category.

Etsy shares initially sold off in the first couple of months following its 2015 IPO. It certainly didn’t help the stock’s bearish momentum when Amazon launched its Handmade at Amazon market place in October 2015.

However, Etsy’s downfall never followed. The stock bottomed at $6.04 in January 2016 and has been on the rise ever since. In fact, in the past two years, Etsy’s stock has nearly kept pace with Amazon, gaining 42.6 percent compared to Amazon’s 57.7-percent gain.

In fact, Etsy’s trailing 12-month revenue growth has actually outpaced Amazon’s in the past two years. Amazon, which has earned quite a reputation for its growth, has increased revenue by 40.2 percent, while Etsy’s revenue has surged 44.9 percent.

Etsy has even managed to turn a modest profit over the past four quarters. Second-quarter EPS of 10 cents pushed Etsy’s rolling four-quarter EPS total to 6 cents ahead of the important holiday shopping season.

This week, Amazon announced it is doubling down in the handmade category by launching a new Handmade gift shop just in time for Halloween. Etsy stock tumbled nearly 4 percent on the news, but perhaps traders are a bit too quick to forget how well Etsy has stood up to Amazon so far.

At time of publication, shares of Etsy were down 3.36 percent at $15.84. Amazon shares were down 1.4 percent at $969.19.

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