Looking for the Next Etsy? This Small-Cap Growth Stock Could Be It

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Etsy (NASDAQ: ETSY) has been one of the big winners on the stock market in recent years.

The online marketplace for homemade crafts and vintage items is now an investor darling, having jumped more than 300% over the last year, helped by the transition to e-commerce during the pandemic. There are plenty of reasons why investors like the stock today, including its unique positioning as an artisan-based market and its blowout growth of late. However, the real story of its success is more complicated than that.

Etsy stock shot up on its IPO on April 16, 2015, closing at $30 a share. Investors clearly had high hopes for the stock, but not long after the debut it was trading in single digits. In May 2017, activist investors saw an opportunity, calling the company bloated and demanding new leadership. The board ousted CEO Chad Dickerson and brought in Josh Silverman to run the company. Silverman, who was previously an executive at eBay, got to work slashing costs and improving the business. He scaled back on corporate perks, laid off 140 employees to trim a bloated management structure, focused on nuts-and-bolts tech improvements like improving the search function, and focused on the customer experience, rather than pleasing merchants, arguing that merchants would be satisfied with increased sales.

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