Scott Devitt, an technology sector focused analyst from investment banking firm Stifel Nicolaus, downgraded Etsy from buy to hold on Tuesday on fears of declining growth of the marketplace in 2021.
“While we remain supportive of the company and its long-term growth prospects, we see a more challenging setup for 2021 in a recovery scenario given challenging comps beginning in 2Q, expectations for less robust eCommerce growth broadly, decelerating mask sales, and volume deceleration in the home category,” said Devitt.
Overall, Etsy continues to receive buy and strong buy recommendations from other Wall Street analysts, but his concerns are not without merit.
While his message is for investors, it also is an “early warning” to sellers that 2021 could see a decline in sales growth as the company benefited from COVID lockdowns and consumer demands of early hard-to-find products such as masks.
In January, a good review of product mix and listing strategy that reflects the reality 2021 will differ from the “high-rising” 2020 should be in order for every Etsy seller. It’s a good business practice to understand and expect changes in consumer trends, especially as normality may return during 2021.
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