An e-zine that keeps you informed on the hottest trends on Wall Street, provides you with the key information to make you filthy rich (*your results may vary)
by Joseph Hargett | June 11, 2022
Hey, Great Ones, can we go thrift shopping?
What? What? What? What?
You know … pop some tags? Only $20 in our pockets? Hunting through clothing racks looking for a come-up?
Again … what?
I’m talking about secondhand consignment stores. The ones that pile all the clothes other people didn’t want haphazardly all over the place. The miles and miles of clothing racks filled to the brim with the greatest fashion hits of the ‘70s, ‘80s and ‘90s — just like your favorite radio station.
Sir, this is still a financial publication, right?
It is, and boy do I have an investment idea for you that you probably haven’t thought of yet. And it involves thrift shopping … wait for it … online!
But first, I must warn you. If you have kids … especially teenagers and Gen Zers … don’t let ‘em find out about this company. It’ll be bye-bye bank account.
The company I’m talking about is Etsy (Nasdaq: ETSY).
You got us all hyped up for Etsy? Come on, man …
Hold your horses there. Y’all probably already know all about Etsy and its crafty online marketplace.
You also probably know that ETSY stock exploded during the pandemic, soaring more than 600% to a high of $307 by November 2021. And you also probably know that ETSY stock is down 72% so far in 2022.
Now, if you were one of the lucky ones who bought ETSY back in March 2020, you’re still sitting on a gain of more than 100%. I doubt many of you owned ETSY stock during the pandemic and I doubly doubt that many of you are still holding ETSY shares right now.
I mean, online crafty retailers just don’t seem all that inspiring without pandemic lockdowns. Furthermore, the retail sector as a whole is really taking it on the chin right now with the potential for a U.S. economic recession in the cards.
But I’m about to tell you why you should definitely consider — or reconsider — investing in Etsy.
OK, so y’all probably already know all about the crafty side of Etsy’s online retail shindig. It’s the company’s core business, after all. Who knew that hoards of personalized crocheted fluffy animals, custom-printed t-shirts and handmade beaded bracelets could bring in so much money?
It’s like an online local business fair. Albeit, one that has seen revenue grow by an average of 74.5% for the past year and a half!
Most of that revenue growth, however, happened during the pandemic lockdowns. And now, with a potential recession on our hands, and former online shoppers touching grass in record numbers … Etsy’s online marketplace is looking a little lackluster.
Granted, that’s lackluster compared to a formerly captive audience. But when has Wall Street ever cared about such nuances?
I like to believe that Etsy saw this turn of events coming. That it knew it couldn’t keep up with analysts’ growth-rate expectations given how much business boomed during the pandemic. That the company’s board had an inkling a recession was coming, and that its core customer base was about to go searching for lower-cost options.
Whether Etsy was prescient or not, shelling out $1.6 billion for online thrift shop company Depop is about to turn into a stroke of genius.
Yes, you read that right: online thrift shop.
No more digging through piles and piles of clothes, accessories and used electronics to find what you’re looking for. Depop’s website and app list it all right there with big, bold pictures … and it’s all searchable by color, type, size, etc.
Now, some people will say that “searching through all that mess is part of the fun!” Those people are sick and have probably never gone thrift shopping with two teenage girls. I’d personally rather sit on a bench outside a Kohl’s changing room for an hour than endure that again.
Depop cuts all of that searching out … as well as all the “interesting” smells that come along with thrift shops. The company has boiled all of that down to something as easy as searching Amazon for a product on its website and app.
But, Mr. Great Stuff … it’s just a thrift store!
Ah, I see that you, too, don’t have any Gen Z kids. Thrift stores are “all the rage” with shoppers under the age of 26 right now.
In fact, about 90% of Depop’s clientele are Gen Zers. Few, if any, other retailers — online or not — can boast that kind of generational penetration. That’s the kind of Gen Z rapport Snap wishes it had.
I know this is anecdotal, but my kids love going to thrift shops. And when we go, those shops are filled with other kids all searching through your hand-me-downs looking for something to fit their fashion sense and style.
And it’s not just fashion. Have you ever heard of cosplay? Don’t worry, your kids and their friends have. It’s where people dress up like their favorite characters from TV shows, movies, anime, cartoons, etc. Apparently thrift shops are among the best places to shop for cosplay items and accessories.
Now, combine all that fashion sense and cosplay into one tidy little app on their smartphones … and you can start to see why Depop is not only worth the $1.6 billion Etsy paid, it will also make Etsy a lot of money.
You’re probably still thinking: “There’s no way thrift shopping can bring in that much money!”
I have to tell you. I was right there with you when I first heard about Depop. How is a company going to make money by selling secondhand clothing and goods? The whole point of thrift shopping is to save money, not spend more.
All I have to say is: Where there’s demand … there’s a way. And there is a literal ton of demand.
According to ThredUp’s annual fashion report, the secondhand market is expected to reach $53 billion by 2023. Breaking that number down, ThredUp says that $27 billion of that will come from direct resale, with $26 billion coming from secondhand — or thrift — shopping.
What’s more, the resale/secondhand market is expected to grow 11 times faster than traditional retail in the next year. It’s growing so fast that even the big-boy retailers are getting in on the resale act, including Lululemon, Macy’s, Walmart, Gap, Adidas and even Crocs.
Seriously, guys … Crocs? Not only are you buying Crocs, but you’re buying secondhand Crocs? Eeeew! Where’s my bleach…
Anywho, the point is that secondhand/resale is a massively growing trend in the retail sector. Everyone wants a piece of the market. But not everyone has the same resonance with the biggest thrifting generation in a long time … Gen Z.
The young’ns already love Etsy, from what I can tell from my kids and all their friends. Add thrift shopping to that equation and allow them to do so from their phones? That’s a match made in heaven.
But wait! There’s more…
How about we throw in $25 million per year in purchase protection, direct from Etsy?
That’s Etsy COO Raina Moskowitz talking about the company’s new Purchase Protection program.
You aren’t going to find that kind of protection at any brick-and-mortar thrift shop, let me tell you.
So, there you have it.
Not all retail is dead or dying. The secondhand and resale markets are booming big time, and Etsy is primed and ready to take full advantage of this $53 billion trend.
Not only that, but Etsy has tapped into Gen Z in a way that few other retailers, or even social media companies outside of TikTok, have been able to do.
With ETSY stock down a whopping 72% this year, I don’t think Wall Street has caught on to this trend just yet. That means you can pick up this Gen Z retailer at basically secondhand prices right now!
And because of that, Great Ones, I’m officially adding ETSY stock to the Great Stuff Picks portfolio.
The bottom line: Buy ETSY stock.
Looking for other, non-retail trends? We’ve got you covered there too! (Especially all y’all thrifty investors.)
Ian King just revealed his No. 1 crypto play of the year — a coin experts say will become 20X bigger than Bitcoin and mint a new wave of crypto millionaires.
You want to talk about the next generation? The “Next Gen Coin” is it.
As always, thank you for coming to my Great Chat! If you have a stock or investing idea you’d like to see covered in the Great Stuff weekend edition, let us know at: GreatStuffToday@BanyanHill.com.
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Editor, Great Stuff