In the age of Amazon (AMZN) - Get Report, where few online marketplaces have managed to survive, much less thrive, Etsy (ETSY) - Get Report has been a standout, its stock jumping nearly 10% in just the past week, fueled by news the company acquired Elo7, which was already regarded as "the Etsy of Brazil."
The Street’s Jim Cramer says small businesses are the backbone of the American economy and investors should look to the companies supporting small business -- like Etsy, along with Shopify (SHOP) - Get Report and Square (SQ) - Get Report.
Cramer spoke in a recent Mad Money interview with Josh Silverman, CEO of Etsy -- who Cramer said is all about helping entrepreneurs realize their dreams by letting them scale, something that they could never do before Etsy.
Etsy features artisan and handmade products, sold in individual shops that often involve as much care and design as the crafts, clothes and other products do. Silverman told Cramer that apparel is a big untapped market and one that really benefits from a marketplace like Etsy to bring buyers and sellers together.
Silverman said that Elo7 was modeled after Etsy and is well-positioned and the perfect marriage. Elo7 boasts 56,000 sellers that offer over eight million items for sale to 1.9 million registered buyers. Following the transaction, Elo7 will continue to be headquartered in Sāo Paulo and operate as a stand-alone marketplace run by its current management.
Cramer also mentioned Etsy in his Real Money column this week, writing: “Finally there's Etsy, which bought a Brazil-based marketplace for unique, handmade items for $217 million. No big deal? This is a market that could be huge given how fractured it is. You have to believe it can be an innovative bonanza,” Cramer wrote.
Independently, Cramer said, “Etsy wouldn't have much of a business. ...But collectively the profits are so big that the stock of this company is up more than 2000% in the past five years. Thank you, Josh Silverman, for having your priorities right."
When asked whether Etsy would consider accepting cryptocurrency as payment, Silverman said that today, most people are investing with cryptocurrencies, but so far, they haven't seen a lot of interest in using it for tender.
Silverman was also excited about Depop, Etsy’s new marketplace for clothing. Earlier this month, Etsy agreed to buy youth-focused clothing marketplace Depop for around $1.63 billion in a move to expand its customer demographics. Etsy said London-based Depop, which handles around $650 million in gross merchandise sales a year, is one of the top 10 most visited apps by Gen Z consumers, with 90% of its active users younger than 26.