Etsy vs Shopify Which Outperforms?

Etsy and Shopify are two e-commerce giants that dominate the online marketplace industry. Both companies have experienced substantial growth in recent years, but they cater to different types of sellers and customers. Etsy is known for its focus on handmade goods and unique, one-of-a-kind items, while Shopify provides a platform for businesses of all sizes to create their online stores. Investors considering these two stocks must weigh the pros and cons of each company's business model, growth potential, and market position.

Etsy or Shopify?

When comparing Etsy and Shopify, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between Etsy and Shopify.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. Etsy has a dividend yield of -%, while Shopify has a dividend yield of -%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. Etsy reports a 5-year dividend growth of 0.00% year and a payout ratio of 0.00%. On the other hand, Shopify reports a 5-year dividend growth of 0.00% year and a payout ratio of 0.00%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with Etsy P/E ratio at 26.24 and Shopify's P/E ratio at 106.97. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. Etsy P/B ratio is -10.79 while Shopify's P/B ratio is 14.62.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, Etsy has seen a 5-year revenue growth of 3.72%, while Shopify's is 4.42%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with Etsy's ROE at -43.01% and Shopify's ROE at 14.85%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $57.96 for Etsy and $113.44 for Shopify. Over the past year, Etsy's prices ranged from $47.10 to $89.58, with a yearly change of 90.19%. Shopify's prices fluctuated between $48.56 and $120.72, with a yearly change of 148.60%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.