We recently published a list of Jim Cramer Stocks: 10 Latest Calls. Since Etsy Inc (NASDAQ:ETSY) ranks 8th on the list, it deserves a deeper look.
Jim Cramer in a new program on CNBC talked about the latest pullback on Tuesday, when the market snapped its 8-day winning streak. Cramer said that the hopes of rate cuts were buoying the markets all along. According to Cramer, when a company posted a good quarter, its stock roared. If a company reported a bad quarter, investors assumed it was the “last bad quarter” because the Fed was about to start cutting rates.
“In other words, companies could do no wrong. But not today. Today we had a bit of a reckoning and dose of reality being thrown in our faces.”
Cramer talked about two home improvement companies that recently reported their quarters. According to Cramer, these results show that the consumer is still extremely cautious, and high mortgage rates and inflation is keeping spending on big-ticket items depressed.
“Wall Street is maybe expecting not good news from the Fed on Friday and therefore a slowdown, a bad slowdown,” Cramer said.
Jim Cramer said the market is “rational” again and the optimism needed to be “tempered” before the next rally.
For this article we watched several latest programs of Jim Cramer aired on CNBC and picked 10 stocks he’s recommending investors to buy or sell. With each company, we have mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
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Etsy Inc (NASDAQ:ETSY)
Number of Hedge Fund Investors: 36
Jim Cramer was asked about Etsy in a latest program by a caller who said he’s down 30% on his position in the company. Here is what Cramer said:
“I think you are going to understand that if you are willing to buy time for a while that’s what you are going to have to do with Etsy because it’s not going to go right back up, it’s just not,” Cramer said.
Etsy Inc (NASDAQ:ETSY) is an online marketplace for handmade or vintage items, art and collectibles. The platform saw strong activity during the pandemic days but since then the company has been trying to spur growth and facing headwinds amid inflation and an overall weakening consumer environment.
During the second quarter, Etsy Inc (NASDAQ:ETSY) gross merchandise sales fell 1.9% year over year on a constant currency basis. Earlier in the year the company had hinted that its GMS metric would recover later in the year but there was no mention of that expected improvement in the latest earnings call. During the third quarter the company expects GMS to decline in the low single digits. Etsy Inc (NASDAQ:ETSY) reaffirmed its full-year adjusted EBITDA margin target of at least flat to FY23, or 27%.
During the second quarter, Etsy saw solid response to its new gifting feature but that was mainly due to events like Mother’s and Father’s Day and graduations. Etsy Inc (NASDAQ:ETSY) is also betting on another new feature called Etsy Insider — a subscription program that offers benefits like free shipping, some special discounts, etc. However, analysts believe these won’t be enough for the company to return to the past growth.
Artisan Small Cap Fund stated the following regarding Etsy, Inc. (NASDAQ:ETSY) in its Q2 2024 investor letter:
“We ended our investment campaigns in Bentley and Etsy, Inc. (NASDAQ:ETSY) during the quarter. Etsy is the leading e-commerce marketplace for buyers and sellers of unique, hard-to-find handmade or vintage products. Given its large addressable market, experienced management team and unique technology investments, we believed the company had a long runway for further top-line growth. However, financial results have been disappointing, and we decided to exit the position.”
Overall, Etsy Inc (NASDAQ:ETSY) ranks 8th on Insider Monkey’s list titled Jim Cramer Stocks: 10 Latest Calls. While we acknowledge the potential of Etsy Inc (NASDAQ:ETSY), our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than ETSY but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.