Investors who missed the monster rally in Etsy (NASDAQ:ETSY) and Pinterest (NYSE:PINS) may only study what went wrong. Both stocks make little sense for the traditional investor who relies on price-to-earnings. Conversely, customer retention, and widening moat suggest sustained revenue growth ahead.
Etsy will report quarterly results next month. And even though stocks are closer to its yearly highs, the stock could climb higher from here. If gross merchandise sales growth trounces consensus estimates, analysts must revise their peak growth forecast. The independent merchants who rely on Etsy’s platform are growing. More of them are joining the platform as physical stores close down and lose relevance in the ongoing COVID-19 pandemic. As countries enforce strict physical distancing and threaten to lock-down again, Etsy’s prospects improve.
Pinterest instantly lost $89.5 million when it terminated its lease agreement in San Francisco. But the stock continues to fly higher after the earnings report is posted on July 31. Besides, the one-time cost is a better expense than a recurring one. This will save the social networking company money.
In Q2, Pinterest reported revenue growing 4% to $272 million. Its global monthly active user growth of 39% Y/Y to 416 million impressed investors. Another strong user growth number this quarter may send shares higher a second time around.