The economy showed new life last week when several companies reported better than expected earnings. Airbnb (NASDAQ: ABNB), Wayfair (NYSE: W), and Etsy (NASDAQ: ETSY) are on track to continue crushing sales, and all of their stock prices have jumped based on their respective results. Let’s see why you can expect them to keep winning.
1. Airbnb: want to go out
This is how I would describe most of us who have been locked up at home over the past year. Airbnb went public probably at the worst time in its company’s history, with a 30% year-over-year drop in sales in 2020.
Investors were enthusiastic enough to push the share price up over 100% from the IPO price before the first day of trading. And it keeps on climbing, 40% gain so far in 2021.
Revenue and gross bookings were down again from a year earlier in the fourth quarter, but both showed improvement, down 22% and 31% respectively. It was better than expected, and not too bad considering the weather. The net loss amounted to $ 3.9 billion, including $ 2.9 billion in equity-related expenses. Adjusted EBITDA (earnings before taxes, depreciation and amortization) improved from a loss of $ 276 million to a loss of $ 21 million.
Investors are confident for good reason. A survey of businesses indicated that more than half of those polled were planning a trip soon, and informal research comes to a similar conclusion.
Airbnb has focused on becoming more efficient during the pandemic, streamlining operations to reduce expenses, and for 2021, it is renewing its core commitment to hosts and customer service. The company expects a drop in sales in the first quarter that is narrower than in the fourth quarter, but the situation may not change significantly while the pandemic is still strong.
2. Wayfair: Spend more on furniture
2020 was the year of Wayfair. Doomsday analysts said the price was too high as the price jumped after a difficult 2019. The stock ended 2020 up 140%, but a strong fourth quarter pushed the stock even higher.
The online furniture retailer was on the cusp of success during the pandemic and revenues increased throughout. In the fourth quarter ended December 31, revenue increased 45%, which was slightly less than management expected, but gross margin of 29% exceeded expectations. Earnings per share were $ 0.23, an improvement from a loss of $ 3.54 in 2019.
There were 31 million active customers in the fourth quarter, a 54% increase from the previous year, and revenue and orders per customer increased slightly. As usual, loyal customers played a prominent role, with a 56% increase in orders. Mobile was also a significant part of the package, accounting for 60% of orders.
Wayfair’s $ 14 billion in sales are just a fraction of a total home improvement market of $ 840 billion that is expected to grow to $ 1 trillion by 2030. Online penetration in the category of homes grew from 14% to 21% in 2020, fueled by the pandemic, and the business sees itself growing at eight times 2020 sales over the next 10 years.
3. Etsy: discover personalized products
Etsy, an online platform for personalized and exclusive products, has been another winner in the pandemic. And the fourth quarter was another remarkable one, with revenue growth of 129% and gross merchandise volume growth of 118%.
It was the year Etsy went mainstream, and CEO Josh Silverman pointed out that customers are now turning to the platform for their day-to-day needs. Active buyers, defined as having made a purchase during the year, increased 77% to 81 million. Regular shoppers, who made two purchases in the past 12 months, are up 97%. And repeat buyers, who made more than six purchases during the year, were up 157%. Gross merchandise sales (GMS) per buyer increased 22%. As a perspective, Etsy’s growth outpaced overall e-commerce growth by 2.5 times (as recorded by the Commerce Department’s Census Bureau), even after canceling face mask sales.
The company sees an addressable market of $ 1.7 trillion and is working to improve the user experience and relationships with manufacturers.
Etsy expects similar numbers in the first quarter, with GMS growth of 115 to 125% and sales growth of 125 to 135%. Its shares gained 301% in 2020 and are already up 21% in 2021.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Questioning an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.