April 15, 2024

AMZN: Amazon.com (AMZN) vs. Etsy (ETSY)

The positive long-term outlook for the Internet industry is driven by the increase in online activities and the rapid progress of 5G technology. In this context, I have compared the fundamentals of two leading e-commerce giants, Amazon.com, Inc. (AMZN) and Etsy, Inc. (ETSY), to determine which might be the best choice.

The global impact of the COVID-19 pandemic has acted as a catalyst, accelerating the digital transformation process at a much faster pace than originally anticipated. Profound changes in social behaviour, driven by factors such as remote working, online education and increased reliance on e-commerce, underline the vital role the Internet plays in shaping contemporary lifestyles.

In 2023, the global count of active Internet users surpassed 5.3 billion, representing 65.4% of the world’s population, underscoring the widespread and widespread adoption of Internet connectivity. As we move into 2024, this figure is expected to continue its upward trajectory, reaching a noteworthy level. 6.54 billion by 2025.

Additionally, as Internet penetration and smartphone usage increases, consumer preferences are shifting toward online shopping. Projections indicate that the e-commerce market is about to reach a staggering figure. 8.80 trillion dollars this year and is further projected to rise to a remarkable $18.81 trillion, growing at a CAGR of 15.8% between 2024 and 2029.

Additionally, the internet industry’s prospects are bolstered by the widespread adoption of 5G technology, which offers faster and more reliable connectivity. Global 5G Subscriptions They are projected to exceed 5.30 billion in 2029, making up 58% of all mobile subscriptions at that time, reflecting the growing demand and adoption of this advanced technology on a global scale.

In light of such a favorable industry outlook, both AMZN and ETSY should benefit. However, AMZN appears to be a clear winner in terms of profitability. Over the past six months, AMZN stock has risen 20.7%, while ETSY stock has plummeted 29.4%.

Additionally, AMZN shares have risen 2.3% over the past month to close the latest trading session at $156.87. In contrast, ETSY shares have fallen 19.6% over the past month to close the latest trading session at $68.32.

However, to know which Internet The stock could be the ideal buy, let’s delve into its fundamentals:

Recent developments

On January 10, 2024, AMZN introduced the Buy with Prime integration for Salesforce Commerce Cloud, enabling the seamless addition of Buy with Prime to the existing shopping experience for Salesforce merchants. This integration introduces new features, such as the ability for shoppers to search and filter for Prime-eligible items and purchase Prime-eligible and other items in a single order.

It aims to help Salesforce merchants attract new customers and improve conversion rates by providing convenient Prime benefits, including fast and free delivery, a secure checkout process, 24/7 live chat support. days of the week and easy returns.

In contrast, on January 24, 2024, ETSY introduced “Gift Mode,” an AI-powered feature that uses an online questionnaire to provide personalized gift suggestions based on specific preferences. The questionnaire covers details like the relationship, occasion, and interests of the recipient, and offers personalized gift guides from ETSY’s vast selection of over 100 million items, organized into over 200 different personas.

Recent financial results

For the fiscal third quarter, ending September 30, 2023, AMZN’s total net sales increased 12.6% year over year to $143.08 billion. Its operating income grew by 343.1% from the previous year’s value to $11.19 billion. Additionally, the company’s net income and EPS amounted to $9.88 billion and $0.94, up 244% and 235.7% from the prior-year quarter, respectively.

ETSY’s revenue for the fiscal third quarter (ended September 30, 2023) amounted to $636.30 million, while its net income was $87.85 million and $0.64 per share, respectively.

During the same period, the company’s cash and cash equivalents and total current assets amounted to $741.96 million and $1.34 billion, a decrease of 19.5% and 11.3% compared to the 921.28 million dollars and 1.51 billion dollars as of December 31, 2022, respectively.

Past and expected financial performance

AMZN’s revenue and EBITDA have grown at a CAGR of 16.8% and 19.2% over the past three years, respectively. Its net income and EPS grew at a CAGR of 4.9% and 3.9% during the same period, respectively.

Analysts expect AMZN’s revenue for the fiscal fourth quarter (ended December 2023) to increase 11.2% year-over-year to $166.18 billion, while its EPS for the same quarter is expected to increase significantly year-over-year year up to $0.79.

Over the past three years, ETSY’s revenue and EBITDA have grown at a CAGR of 25.3% and 9.3%, respectively. While its net income and EPS grew at a CAGR of 12.9% and 9.8%, over the same time period, respectively.

Street expects ETSY’s revenue and EPS for the fiscal fourth quarter (ended December 2023) to increase 2.5% and 16.6% year over year to $827.38 million and $1.34, respectively.

Cost effectiveness

AMZN’s trailing-12-month asset turnover ratio of 1.21x is higher than ETSY’s 1.11x. Similarly, AMZN’s trailing 12-month CAPEX/Sales of 9.88% is higher than ETSY’s 0.59%.

Therefore, AMZN is more profitable.

Valuation

In terms of forward EV/Sales ratio, ETSY’s 3.59x is 19.7% higher than AMZN’s 3.00x. Likewise, the advance of ETSY Price/Sales The ratio of 3.08x is 9.2% higher than AMZN’s 2.82x. Additionally, ETSY’s non-GAAP forward PEG multiple of 2.83 is 25.2% higher than AMZN’s 2.26.

Therefore, AMZN is more affordable.

POWR Ratings

AMZN has an overall rating of B, which equates to a Buy on us POWR Ratings system. In contrast, ETSY has an overall rating of C, which translates to Neutral. POWR ratings are calculated by considering 118 different factors, and each factor is weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight different categories. AMZN has a B Growth rating, which is consistent with its strong financial results in the third quarter. On the other hand, ETSY has a D grade for Growth, which is in sync with its weaker financial performance in the third quarter.

Additionally, AMZN’s C Stability rating is justified by its 60-month beta of 1.16. In contrast, ETSY’s D Stability rating is consistent with its 60-month beta of 2.06.

Among the 53 B-rated stocks Internet industry, AMZN ranks 11th, while ETSY ranks 44th.

Beyond what we’ve said above, we’ve also rated both stocks on value, momentum, sentiment, and quality. Click here to see AMZN ratings. Get all ETSY ratings here.

The winner

While both AMZN and ETSY should benefit from the promising internet industry outlook due to the growth of e-commerce and 5G connections, AMZN’s superior financials, higher profitability, and lower valuation could make it a better investment candidate for their wallet than ETSY.

Our research shows that the odds of success increase when you invest in stocks with an overall rating of Strong Buy. See all the top-rated stocks in the Internet industry here.

What to do next?

Discover 10 widely held stocks that our proprietary model shows have tremendous downside potential. Please make sure that none of these”death trap“Stocks are lurking in your portfolio:

10 stocks to SELL NOW! >


AMZN stock was trading at $157.25 per share on Thursday morning, up $0.38 (+0.24%). So far this year, AMZN has gained 3.49%, versus a 2.68% rise in the benchmark S&P 500 index over the same period.

About the author: Anushka Mukherjee

Anushka’s ultimate goal is to equip investors with essential knowledge that enables them to make well-informed investment decisions and achieve sustained, long-term financial prosperity. Further…

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