2 E-Commerce Stocks to Avoid in December

NASDAQ: ETSY | Etsy Inc. News, Ratings, and Charts

ETSY – E-commerce companies are currently witnessing declining sales as people return to shopping at brick-and-mortar stores with the reopening of the economy. Furthermore, shipping delays, delivery charges, and the capacity for in-person product evaluation have shifted consumer preference back toward physical stores. Therefore, we think investors are better off avoiding e-commerce stocks Etsy (ETSY) and Wayfair (W), which possess bleak financials. Read on.

The e-commerce industry benefited enormously from the pandemic-led lockdowns last year, with a dramatic shift in consumer preference toward online shopping. Many conventional brick-and-mortar stores transformed their business strategies to boost their online presence in response to shifting customer behavior.

However, with significant progress in vaccinations and the easing of social distancing rules, brick-and-mortar stores have witnessed a substantial increase in foot traffic over the past few months. In addition, researchers found that approximately  40% of consumers prefer in-store shopping over online due to high delivery charges, shipping delays, and the opportunity to examine products in person before buying.

The increasing popularity of physical stores may make it difficult for e-commerce companies with bleak fundamentals to stay afloat. Therefore, we believe fundamentally weak e-commerce stocks Etsy, Inc. (ETSY) and Wayfair Inc. (W) are best avoided now.

Click here to check out our E-commerce Industry Report for 2021

Etsy, Inc. (ETSY)

ETSY is a global marketplace for handcrafted and vintage products that connects buyers and sellers in the U.S. The Brooklyn, N.Y.-based company offers approximately 85 million items in its various retail categories, including jewelry and accessories, clothing and shoes, home and living, toys, and other collectibles. In addition, ETSY provides Etsy Payments, Etsy Ads, and Etsy shipping labels to the sellers.

ETSY’s total operating expenses for the third quarter, ended September 30, 2021, increased 38.4% year-over-year to $295.03 million. The company’s income from operations decreased 29.1% from its year-ago value to $83.74 million. Its net income declined 2% from the prior-year quarter to $89.93 million. Also, the company’s EPS declined  11.4% year-over-year to $0.62.

ETSY’s EPS is expected to decrease 28.7% in the current quarter and 14% in the next quarter. The stock has fallen  11% in price over the past five trading days.

ETSY’s POWR Ratings are consistent with this bleak outlook. The stock has an overall D rating which equates to a Sell in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.

Also, the stock has an F grade for Value and a D grade for Stability and Growth. We have also graded ETSY for Quality, Sentiment, and Momentum. Click here to access all ETSY’s ratings. ETSY is ranked #54 of the 77 stocks in the F-rated Internet industry.

Wayfair Inc. (W)

Founded in 2002, W is a Boston-based e-commerce platform that offers some 22 million products under a wide range of brands, including Wayfair, Joss & Main, AllModern, Birch Lane, and Perigold for the home sector. The company’s products include furniture, kitchen appliances, home decors, and other home improvement products.

During the third quarter, ended September 30, 2021, W’s net revenue decreased 18.7% year-over-year to $3.12 billion. The company’s gross profit declined 23.1% from its  year-ago value to $882.73 million. Its loss from operations came in at $69.8 million, compared to $221.85 million in  income from operations in the prior-year quarter. Also, the company’s net loss amounted to $78.02 million, compared to $173.17 million in net income in the third quarter of 2020.

Analysts expect W’s revenue to decrease 2.5% year-over-year to $13.79 billion in its  fiscal year 2021. Its EPS is expected to decrease 150.8% in the current quarter and 131% next quarter. Its stock has declined 23.2% in price over the past six months and 27.3% over the past nine months.

W’s poor prospects are also apparent in its POWR Ratings. The stock has an overall D rating, which equates to a Sell in our proprietary rating system. The stock has an F grade for Growth and a D grade for Sentiment.

In addition to the POWR Rating grades I have just highlighted, one can see W’s ratings for Stability, Quality, Value, and Momentum here. W is ranked #43 of 44 stocks in the B-rated Specialty Retailers industry.

Click here to check out our E-commerce Industry Report for 2021


ETSY shares were trading at $251.70 per share on Thursday morning, down $7.58 (-2.92%). Year-to-date, ETSY has gained 41.48%, versus a 22.80% rise in the benchmark S&P 500 index during the same period.


About the Author: Priyanka Mandal


Priyanka is a passionate investment analyst and financial journalist. After earning a master's degree in economics, her interest in financial markets motivated her to begin her career in investment research. More...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
ETSYGet RatingGet RatingGet Rating
WGet RatingGet RatingGet Rating

Most Popular Stories on StockNews.com


:  |  News, Ratings, and Charts

Bulls in Charge…for Now at Least

Every since the S&P 500 (SPY) made new lows in mid June the bulls have been back in charge. At first it looked like your typical bear market rally. However, there are more and more signals going off that this may be the real deal. As in the new bull market may have arrived. That topic is a big deal as one's outlook, bullish or bearish, weighs heavily on how they construct their portfolio for the days and weeks ahead. That is why we will focus on that topic in today's commentary. Read on below for more…

:  |  News, Ratings, and Charts

The 3 Top Aerospace and Defense Stocks to Buy Now

The U.S. aerospace and defense industry is evolving, supported by lucrative fiscal investments and rapid defense technology advancement. Moreover, given the growing tension between China and Taiwan, it could be wise to add quality aerospace and defense stocks, Lockheed Martin (LMT), L3Harris Technologies (LHX), and Raytheon Technologies Corp. (RTX) to your portfolio now. Continue reading…

:  |  News, Ratings, and Charts

How to RIDE the Next Bull Market?

Growth stocks are back! And, they are leading the S&P 500 (SPY) higher after the brutal bear market investors experienced this year. Read on to find out the best strategy to profit from the next big bull market in growth stocks...

:  |  News, Ratings, and Charts

2 Momentum Stocks Crushing the Bear Market

Valero Energy (VLO) and Shell (SHEL) have maintained strong momentum amid the highly uncertain market conditions. With recession fears expected to keep the market under pressure in the near term, it could be wise to buy these stocks now to benefit from their momentum, which might continue for some time based on their fundamental strength irrespective of the market conditions. Read on…

:  |  News, Ratings, and Charts

How to RIDE the Next Bull Market?

Growth stocks are back! And, they are leading the S&P 500 (SPY) higher after the brutal bear market investors experienced this year. Read on to find out the best strategy to profit from the next big bull market in growth stocks...

Read More Stories

More Etsy Inc. (ETSY) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All ETSY News