New Trade: Long Netflix ($NFLX) & Short Etsy ($ETSY)

By: ispeculatornew
Date posted: 02.21.2017 (3:00 am) | Write a Comment  (0 Comments)

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Today I am opening my 7th trade of the year and surprisingly they are all still live. So far so good but no need to jinx it at this point. As is always the case, you can see past 2016 (and previous years) trades here:

Let’s start off by looking at the numbers:

TickerNamePricePE RatioPE Next YearReturn YTDSales GrowthAnalyst ratingBook ValueBetaRevenue/ShareSales 5Y Avg GrowthEPS 5Y Avg Growth
ETSYEtsy Inc12.9N/A59.279.6839.833.833.061.893N/AN/A
NFLXNetflix Inc142.22338.1260.1514.7130.263.956.231.4620.5923.4695.62

Both of the two charts that follow are tremendously bullish for AMZN. That it’s seeing revenue growth accelerate while much newer player Etsy’s growth is quickly declining and as you can imagine that is also reflected in the interest from Google trends.

credit: Google Trends

Long Netflix (NFLX)

I have a long term very bullish view on Netflix that I hope to write about very soon but suffice to say that I think the company is starting to gain incredible leverage from its position in the market and I do think that while it will hit occasional stock price hits (difficult to avoid them when trading at such high P/E’s), the company remains tremendous value at these levels and I do expect Netflix to keep driving both the top and bottom line forward in the coming years thanks to its position in the market where consumers see it as a must have and content producers are in many ways forced to sell their content to help their long term competitor.

Next earnings: April 24th

Short Etsy Inc (ETSY)

Etsy is another one of those great businesses from a client perspective but that I have strong doubts about from a investor’s point of view. I don’t think any of the users of Etsy directly competes with eBay and Amazon. I would disagree 100%. Fact is that both sellers and buyers can find/sell some of those items at eBay and Amazon and that will end up putting huge pressure on margins for Etsy making growth both on top and bottom lines more difficult. Customer service, shipping, the overall experience all end up being components where Etsy is competing with the sky-high standards that players like Amazon have created.

Next earnings: February 28th 2016

Disclaimer: Prior to opening this trade, I do not have a position on NFLX or ETSY
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