With more than 350 monthly users on its website according to SimilarWeb , Etsy is one of the most popular eCommerce marketplaces in the online world and is the largest online market for handmade crafts. The platform, which was founded in 2005 by Robert Kalin who was looking for a way to sell his goods online, is most popular in the United States but also has a strong presence in the UK with 30% of the total international users.
In 2020, Etsy stock soared by over 260% as of early December and has been one of the top-performing stocks this year. So, if you are based in the UK and looking to buy shares of Etsy, this guide will help you to do that. We’ll analyze the Etsy share price performance, find out if it’s the right time to invest in Etsy, and find the best brokers in the UK that offer you to buy Etsy shares.
Etsy shares are listed on the NASDAQ stock exchange, meaning you’ll have to find a licensed and regulated UK stockbroker that gives you access to US shares. But before you choose a broker, there are several factors to consider. First, you need to decide the trading strategy you wish to apply. As such, if you are looking for a long term investment, you might want to choose a broker that gives you the option to buy shares directly from the exchange. Otherwise, the best option for you is to buy shares via CFDs. This is because trading shares via CFDs is the most cost-effective for active traders, however, investors who want to take long term investment must take into consideration an overnight swap fee.
Another factor to consider is the trading platform, features, and trading term the broker offers you. For example, the majority of CFD brokers gives you access to fractional trading and top-notch interactive trading platforms that can be extremely efficient for day trading activity.
With all that in mind, let’s take a look at two of our most recommended brokers in the UK for buying Etsy shares:
eToro is our most recommended broker for UK investors that want to buy Etsy shares. This broker is the largest social trading platform in the world and enables users to not only get access to thousands of assets but also interact with other investors and copy their trades by using the CopyTrade tool.
One of the reasons we like this broker is because it allows traders to buy shares outright or via CFDs. As such, you’ll be able to alternate between different strategies to avoid paying high trading costs. Additionally, eToro supports fractional trading so you won’t have to purchase a full share of Etsy. Instead, you can invest any amount as long as you meet the minimum investment requirement of £40.
The big advantage of eToro compared to any other platform in the market is that it offers a very user-friendly and unique trading environment. The platform interface is more similar to familiar social networks like Facebook, Twitter, and LinkedIn. Every user has a profile, and you can start discussions with other users, view posts, and share trading ideas.
Finally, eToro is regulated in different countries and regions including the top regulatory agency in the UK, the FCA. Moreover, investors are fully covered by the FSCS with a sum of up to £85,000.
67% of retail investor accounts lose money when trading CFDs with this provider.
While eToro is our most recommended share dealing platform for those who are looking for a social trading experience, Fineco Bank is the ideal UK brokerage firm for investors that are looking for a professional trading platform. Fineco share dealing platform gives investors access to 26 global markets including thousands of shares, and access to top-notch trading platforms.
The broker offers its own web-based custom trading platform and the PowerDesk platform which is a perfect solution for active day traders that are looking for fast trading execution. The broker also offers an intuitive and user-friendly mobile app. Much like eToro, Fineco Bank allows investors to choose between buying shares via CFDs or directly from the exchange. When investors buy US shares from the exchange, they’ll have to pay a fee of $3.95, which is considered a low commission for US share trading in the UK.
In addition to stocks, Fineco offers other markets that include FX currency pairs, CFD indices, futures, options, ETFs, and bonds. In terms of regulation, Fineco Bank holds a license from the Financial Conduct Authority in the UK and the bank of Italy.
Disclaimer: Your money is at risk.
Even though Etsy is one of the top-performing shares in 2020 with an annual return of around 260%, it is still important that you make your own research and get familiar with the products it offers and the company’s financial situation before you make an investment. In this section, we’ll cover the most crucial things you need to know about Etsy shares, including the fundamentals, and the company strength and risks.
What is Etsy?
Etsy is an online eCommerce marketplace used for selling vintage items, handmade, DIY goods, art, and unique crafts. The platform was founded in 2005 by a group of friends led by Robert Kalin in Brookly New York. Today, Etsy is one of the largest e-commerce marketplaces in the world with more than 60 million active users (as of Q2 2020).
Etsy was founded in 2005 in Brooklyn New York by Rob Kalin, Chris Maguire, Jared Tarbell, and Haim Schoppik with a vision to create an online marketplace for individuals who want to sell their goods and crafts. The company went public In April 2015, offering its shares at a price of $16 per share. On the first day of trading, Etsy’s stock price nearly doubled to $31, but very quickly it dropped to trade in a narrow range of $10-$20 until 2018.
In 2018, Etsy shares soared by 132% due to better than expected earnings results, and the increasing popularity of the platform. While 2019 was a disappointing year for the American company, Etsy stock is on fire in 2020. So far this year, it has gained more than 260% despite a minor drop in March. The Etsy share is, in fact, trading at all-time territory after it reached $160.70 on November 30, 2020.
The increase in Etsy shares price was largely is driven by its exceptional performance through the Covid-19 pandemic, much like the majority of eCommercee platforms. Evidently, in the thirst quarter report, Etsy announced a 128% increase in revenue to $451 million, beating Wall Street expectations of $412.7. One of the big reasons for the huge increase in revenues was Etsy’s sale of $346 million worth of homemade masks due to the Covid-19 pandemic.
At the current share price, Etsy has a market capitalisation of slightly above $20bn. Its price per earnings (PE) ratio stands at 83.07, which indicates that investors are willing to pay a very expensive share price because of high growth expectations in the future. As such, it also indicates that the Etsy share price is currently overvalued.
Etsy’s EPS growth for the third quarter ending September 30, 2020, represents an increase of 483.33% to EPS of $0.70. It has a trailing twelve months EPS of $1.81, an increase of 118.07% from the previous year.
At present, Etsy does not pay dividends. Moreover, the company informs on its official website that it does anticipate paying dividends for the foreseeable future as they prefer to retain future earnings for expansion and growth.
Etsy shares have been the big winner of 2020, with a return of around %260 as of early December. The increase in the company’s value was largely driven by Etsy’s growing role as a seller of face masks during the Covid-19 pandemic. But besides that, there are other reasons why analysts and investors believe Etsy’s share price can keep rising in the future.
Etsy is Growing Rapidly
In every aspect, Etsy is growing at lightning speed. It has reported an increase of 128% in revenues for the third quarter of 2020. Active users grew by 56% in Q3, and 15 million new users joined the platform over the past year. And, the growth rate for average free cash flow per share was 810.40% per year! For the next quarter, analysts have high expectations from Etsy with adjusted earnings of $58c per share, an increase of 132%.
It’s also worth mentioning that the company’s growth was high and steady even before the pandemic, Etsy was growing at a rapid pace of 35.56% in 2019, 36.82% in 2018, and 20.9% in 2019.
Etsy is Expanding to Additional Countries and Offers Huge Range of Payment Methods
While Etsy is a niche e-commerce website, it has highlighted its intentions to expand globally to new countries. Recently, the team has announced that it is expanding its proprietary payment platform to seven new countries that include Israel, Malaysia, Mexico, Morocco, South Africa, Turkey, and the Philippines. According to Kruti Patel Goyal, Etsy’s chief product officer, the expansion is expected to continue in the future. The company’s CPO said: “We’re not stopping with these seven markets — we plan on rolling out Etsy Payments in at least three more markets this year.”
In terms of supported payment methods, Etsy is actually one of the best e-Commerce platforms to use for sellers and buyers. These include credit card, debit card, Etsy Gift Card, Etsy Credit, wire bank transfer services, PayPal, Apple Pay, Google Pay, etc. More than that, it is one of the few platforms online that accept bitcoins as a payment method. This can be a huge factor in Etsy’s growth not only as a marketplace but also as a freelancing platform where users can easily exchange goods.
Lower Sellers Fees than Amazon
Generally, there are many competitors for Etsy that include aftcra, ArtFire, Big Cartel, Storenvy, Shopify, Squarespace, RebelsMarket, Folksy, Bonanza, and Craftline. However, the only large competitor of Etsy in terms of handmade market share is, of course, Amazon.
In 2015, Amazon launched its Amazon Handmade, which is quite similar to Etsy’s marketplace. Obviously, there are pros and cons for each platform, but the big difference between the two platforms is that Etsy transaction fees are considerably lower than Amazon’s. So, when looking forward it would be a huge step for Etsy if it takes a portion of Amazon’s market share in the handmade segment.
Step 3: Open an Account and Deposit Funds
As previously mentioned, in order to buy shares of Etsy you’ll have to open a brokerage account with a trusted UK broker like eToro. To get started, you need to visit eToro’s website and complete the registration process by clicking on the Join Now button. Then, in the sign-up form, you’ll be asked to insert your email address, username, and password.
As eToro requires that you verify your identity in order to comply with FCA regulations, you’ll then need to upload a copy of your passport or driver’s license along with a copy of a recent financial statement or utility bill. As soon as you get an email from eToro that your account was approved, you can then deposit funds into your account by using one of these payment methods:
- Debit Card
- Credit Card
- UK Bank Transfer
Once you have completed the account registration and funded your account, you can buy shares of Etsy. On the dashboard, search for Etsy in the search bar and you will be channeled to Etsy’s instrument page.
When you click on the Buy button, you will then be taken to an order form. Here, you’ll have to specify the amount you want to invest in Etsy, and then enter the Place Order button. To view your position and modify it, navigate to your portfolio on the left side menu. Under the portfolio section, you can enter stop loss and take profit orders and close the position whenever you want.
After Etsy’s share price spiked by 260% this year, the question is whether Etsy can keep up the growth in the post-Covid-19 era and rise further. Overall, there are certainly many reasons to buy Etsy shares right now. But if we have to think rationally, Etsy’s share price might be overvalued in terms of its current share price. The high PE ratio indicates that Etsy must grow at the same rate as what happened during the Covid-19 pandemic.
All in all, we think Etsy is a great company offering an eCommerce platform that is here to stay. Moreover, the exponential growth of the company over the last year will enable Etsy to expand to new markets and increase its dominancy as the biggest platform for selling special items and goods.
Having said that, Etsy’s share price seems to be trading at a very high valuation already, and thus, this is a stock that currently worth considering buying in the dip. For now, we expect a pullback before a re-test of the all-time high at a later date.
While Etsy is in a fairly good position right now, it remains to be seen if it continues growing at the same pace and compete with other mega e-commerce platforms like Amazon, eBay, and Alibaba. Put it into perspective, Etsy is a small company compared to these platforms, and there’s always more room to grow for a company like Etsy. With that in mind, Etsy stock is currently trading at a premium to its earnings growth so, at this point, investors should anticipate volatility in the near future.
If you ready to buy Etsy shares, simply click the link below to get started!
67% of retail investor accounts lose money when trading CFDs with this provider.
Who is the chief executive of Etsy?
Josh Silverman is the CEO of Etsy since May 2017.
What stock exchange is Etsy listed on?
Etsy is listed on the NASDAQ stock exchange under the ticker symbol ETSY. In addition, Etsy is also listed on the London Stock Exchange, under the ticker code 0IIW
How big is Etsy in the UK?
Etsy has active users from 234 countries but the majority of its users are in the United States. The UK is ranked second with 13% of total users and 30% of international users.
When did Etsy go public?
Etsy sold its shares to the public on April 16, 2015, at a price of $16 per share.
Can I invest in Etsy via an ISA or SIPP?
Yes. In order to do that, you'll have to find a brokerage firm that enables you to purchase US shares on an ISA or SIPP investment accounts.