5 Best Small Cap Ecommerce Stocks to Buy

2. Etsy, Inc. (NASDAQ:ETSY)

Number of Hedge Fund Holders: 29  

Etsy, Inc. (NASDAQ:ETSY) operates two-sided online marketplaces that connect buyers and sellers. It is one of the premier ecommerce stocks to invest in. On October 14, Etsy revealed a new feature for its top sellers which are enrolled in Etsy Star Seller program, Live Chat Support, in which star sellers can now live chat with Etsy’s support team. Etsy, Inc. (NASDAQ:ETSY) also introduced a new Auto reply option in which sellers will be able to sell weekly schedules to send auto replies while offline.

On October 10, Goldman Sachs analyst Alexandra Steiger initiated coverage of Etsy, Inc. (NASDAQ:ETSY) stock with a Buy rating and a $130 price target, noting that ongoing macro headwinds had led the company to show a great level of resiliency.

At the end of the second quarter of 2022, 29 hedge funds in the database of Insider Monkey held stakes worth $595.9 million in Etsy, Inc. (NASDAQ:ETSY), compared to 43 in the preceding quarter worth $668.5 million. 

In its Q2 2022 investor letter, Oakmark Funds, an asset management firm, highlighted a few stocks and Etsy, Inc. (NASDAQ:ETSY) was one of them. Here is what the fund said:

“We became interested in Etsy (NASDAQ:ETSY) when Josh Silverman took over as CEO in 2017. The company had long been recognized as a great marketplace, but prior management was not focused on maximizing shareholder value. In short order, Silverman transformed Etsy from a borderline non-profit into a higher-margin, faster-growing enterprise. The pandemic helped accelerate already strong fundamental business results as millions of new customers were introduced to the platform while stuck at home. But like so many other Covid-19 “winners,” Etsy has since fallen deeply out of favor with investors, which prompted us to take a closer look. Following a 75% decline in its stock price, the company now trades for 3.5x next year’s revenue or just a low double-digit multiple of operating profit using our estimate of normalized margins. We believe this is an attractive price to pay for a unique digital marketplace with a long runway for future growth. Note that our exposure to Etsy is currently established via options.”