Office Hours: Valuing Etsy’s Stock, Tips for Naming Your Business, and How to Ask for a Promotion or Raise at Work

Stock Analysis

Scott Galloway analyzes Etsy's stock performance, highlighting its significant fluctuations from a high of $300 to its current value in the sixties. He notes that despite the decline, Etsy remains a viable investment if approached with caution and realistic expectations. Galloway advises investors to avoid anchoring on past highs and instead focus on current valuations and market conditions 1.

Ignore the past. Look at similar companies, look at its price to sales, look at its price earnings, look at its enterprise value to EBITDA, look at its sales growth, and then do a quick thumb test or temperature test.

--- Scott Galloway

He emphasizes the importance of comparing Etsy's metrics with similar companies to make informed decisions 2.

   

Market Pressures

Etsy faces significant market challenges, particularly in the current economic climate where consumer spending on discretionary items is under pressure. Scott Galloway points out that Etsy's gross merchandise sales are expected to decline, reflecting broader market trends and the aftermath of its pandemic-driven growth 1. He suggests that the company's stock might be fully valued at present, urging investors to consider the potential for overvaluation relative to other companies.

This feels like it could be an acquisition, but eBay can't afford it. So it would either be Amazon.

--- Scott Galloway

also speculates on the possibility of Etsy becoming an acquisition target, with Amazon as a likely candidate 1.

   

Resilience

Despite the challenges, Etsy demonstrates resilience by maintaining its niche in the e-commerce sector. Scott Galloway acknowledges Etsy's ability to withstand competition from giants like Amazon, attributing its success to a strong market position and a dedicated user base 2. He highlights Etsy's impressive growth during the pandemic, driven by unique product offerings such as face masks and home decor.

Etsy is a little engine that could. I would have thought Etsy would have gotten run over by Amazon.

--- Scott Galloway

notes that Etsy's financial health, including a substantial cash reserve and strategic stock repurchases, further supports its stability in a competitive market 2.