Both of these companies have the potential to increase your initial investment tenfold.
Many things affect the future prospects of a company, but one of the most important indicators by which to assess the potential of a business is the growth in sales (revenue). In particular, strong revenue growth is often an indicator of a valuable product or service. Accordingly, companies that create this value for their customers have the potential to generate profits, which is ultimately reflected in the value of their shares.
Etsy (NASDAQ: ETSY) and Pinterest (NYSE: PINS) have both achieved tremendous growth in recent years, but both of these companies still have a lot of unrealized opportunities and, accordingly, huge potential for further growth. This is why these promotions can make you a millionaire.
Etsy’s mission is to give trade a human face. The company’s global marketplace connects creative sellers with buyers looking for handicrafts or specialty items – things they can’t find anywhere else. Significantly, it is this strategy that sets Etsy apart from the competition, allowing the company to compete with e-commerce titans like Amazon.
Last year, the pandemic spurred the growth of Etsy, and the name has become a household name for many consumers, especially those in need of face masks. In fact, in 2020, gross merchandise sales (GMS) through the Etsy platform were $ 10.3 billion, up 107% from the previous year, and is currently the fourth largest e-commerce market in the US.
This scale is a huge advantage that turns the flywheel of the company’s business. Here’s how it works: As more consumers shop on Etsy, sellers benefit from a wider pool of potential buyers. and as more sellers list their wares on Etsy, buyers are benefiting from more product selection.
Over time, the useful cycle of this “flywheel” helps to expand the Etsy ecosystem and further differentiate itself from other large retail stores. And this led to strong growth in the company’s revenue:
|Indicator||Q1 2018 (TTM)||Q1 2021 (TTM)||CAGR|
|Active buyers, mln||2.0||4.7||33%|
|Active sellers, mln||34,7||90.7||38%|
|Revenue, billion $||0.465||2.0||64%|
Despite these impressive numbers, Etsy has only scratched the surface of its potential. In fact, management estimates the total addressable market (TAM) at $ 437 billion by 2023. And if offline sales are included in the corresponding retail categories, this number rises to $ 2 trillion. In other words, TAM Etsy should continue to grow as e-commerce gains traction.
What’s more, the management’s estimate only takes into account six markets globally, meaning that geographic expansion could further boost Etsy’s TAM. To this end, the company recently entered the Indian market, the world’s fastest growing e-commerce market.
To summarize, Etsy now accounts for less than 1% of the addressable market. But if the company can continue to scale, attracting new buyers and sellers, there is a huge possibility that its market capitalization (and with it the value of shares) will grow by an order of magnitude (about 10 times).
Pinterest is the place to go for inspiration. The company’s platform combines user-generated media content with a visual search engine to help people envision their dreams and discover new ideas – like a delicious recipe, trendy summer clothes, or vacation travel planning tips.
It is noteworthy that the Pinterest platform relies on artificial intelligence (AI) and computer vision, which allows you to personalize the work with it for each user. And as more and more users get involved, Pinterest is collecting more data, increasingly developing and empowering its AI.
Taken together, these attributes make Pinterest unique – it is not just a search engine or just a social platform. Pinterest is a tool that helps people find what they want, even if they don’t have the words to describe it.
These qualities also make the company’s platform a great place to engage consumers with brands. As people come to Pinterest looking for inspiration, digital ads fit seamlessly into the platform. In fact, Pinterest ads provide twice the return on investment (ROI) compared to other social media platforms. And advertisers began to pay attention to this.
This led to strong income growth:
|Indicator||Q1 2018 (TTM)||Q1 2021 (TTM)||CAGR|
|Monthly active users, million||239||478||26%|
|Revenue, $ billion||0.521||1.9||54%|
So why does Pinterest have so much potential? With a market cap of $ 46 billion, Pinterest is more than 20 times smaller than Facebook, but its unique platform is the best place for brands to reach consumers.
In particular, people come to Pinterest looking for ideas – in other words, they often come with the intention of shopping. As a result, the number of Pinterest users interacting with trading tools on the platform has increased by 200% over the past year. What’s more, the company has focused on creating a positive, brand-safe environment, which means ads are unlikely to appear next to controversial content or harsh language of any kind. Other social platforms cannot boast of this.
If Pinterest can consistently continue to grow its monthly active users, then the platform should become more valuable to advertisers over time. And with the digital ad market projected to hit $ 645 billion by 2024, Pinterest is likely to grow roughly tenfold in the coming years. This is why, in my opinion, these stocks definitely deserve the attention of investors.
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