*THIS* Could cause a DEPRESSION | The Cathie Wood Warning.

so in e-commerce etsy missed yesterday

in our course member live stream we

talked about hey if etsy misses there

might be an opportunity to buy it and

kind of leaning towards the belief that

all ecommerce is going to miss because

since january i've been making the

argument that we want to be out of

consumer discretionaries and get away

from people spending money online

because the indicators we're seeing

whether it's through web traffic google

search trends freight information

shipping information or just that

e-commerce is slowing down and so what

have we seen we've seen amazon miss

we saw especially with weak guidance we

saw weak guidance from etsy we saw a

wayfarer down 10 shopify down 16 you

know etsy we'll take a look at what

etsy's doing right now here now that the

market's open etsy uh down 17 right now

it's about to be under 90

i mean it is it is straight selling off

right now holy moly look at that 17 on

etsy let's go to wayfair just to get the

updated number 16 now amazon now down

2.7

and shopify down 15

roughly the same as what we had during

pre-market this is a sign

that the market is like oh crap we

should have gotten out of e-commerce in

january let's get out of e-commerce now

now i actually think there could

potentially become an opportunity when

we get low estimates for q2 maybe even

q3 and at some point over the next six

months i wouldn't be surprised if

there's an opportunity to really get

into these ecom stocks super cheap see

etsy expects revenue in the range of

about 540 million to 590. and this is uh

almost 11

to the midpoint below the 628 million

dollar target

etsy only saw its online sales raise 5.2

percent from a year ago and the ceo

mentions quote we're emerging from an

unprecedented time and with that etsy

has unprecedented growth in a world of

so many more choices our guidance

implies

somewhere between a decline of low

to high single digits in the hc etsy

marketplace year over year in other

words they're forecasting negative

growth

it's like that's scary like nobody wants

negative growth in e-com uh and so

obviously

one of the things that's most

interesting

in my opinion is anytime you're studying

in a sector that's going down what i

always recommend is take even just one

company you don't even necessarily have

to go with all of them take one company

that you really really understand

like etsy for example take that one

company and go through the earnings call

because in the earnings call you're

going to get a sense of what the

complaints are what the issues are uh

what how you know sort of the feeling of

the executives and the boards uh board

members now sometimes people wonder

they're like okay fine then kevin where

do you get the transcripts because i

really don't want to listen to it you

know you'd rather hit like command f and

go through them personally i like using

seeking alpha i mean oftentimes i'll use

the bloomberg terminal but you could

just use seeking alpha and i'll show you

just as an example how you could go

through this so i have not gone through

the etsy one yet but i'll show you just

as an example of what we could do so the

first thing that we could do is we want

to look at potentially pricing or or

pricing power right so let's see what we

have uh we let's see here uh this has to

do with stock based compensation okay if

the pandemic has taught us anything it

has really strengthened our conviction

even more in the enormous size of the

price that we believe we have at etsy

and just uh

dimensionalizes uh if for a second okay

that is like a very weird second uh

sentence that they've got over here

usually what i'm looking for is like

pricing power in terms of like their the

executive's ability to raise pricing see

there you go look at that when we

announce the price increase and keep in

mind this has actually led to a boycott

of etsy over the last few months by a

lot of etsy sellers so you know these

are headwinds but anyway when we

announced the price increase the price

increases takes up our take rate so it

takes up our ability to continue to

spend deeper in the roi curve without

compromising roi thresholds okay this is

like the cfo likes really big words what

he's saying is hey

when we increase prices we can invest

more into our marketing budget which

remember i actually like what etsy does

when it comes to their marketing they do

this special thing where

they'll advertise not

etsy.com they'll advertise one of their

stores

which which are other third-party

sellers and if etsy converts a lead to

that store then they split the marketing

costs with that store so it's really

like no risk for the store and it's

smart spending for etsy because now

they're spending and then actually

supporting some of their businesses at

the same time rather than just

themselves

so i think that's great and that's what

they talk about here so okay

interesting talk briefly about the price

increases here

in mar okay let's see if we could learn

something about the consumer here so

let's go to consume

all right uh i personally couldn't be

more relieved to see it it also means

that in the near term here we go they're

talking about relieved about all the

covet spending that they had right it

also means that in the near term okay

here we go we'll have to fight harder

and invest more and continue to earn and

grow etsy share of the wallet with

consumers which is the only way that our

much larger base of sellers can keep

growing their sales we're up for that

fight okay kind of interesting if you're

talking about having to like fight for

share of wallet because that's a way of

implying that competition is getting a

little bit more difficult right

obviously you're going to have issues

for ukrainian sellers i've actually

brought 3d printed stuff from ukraine

before and i think to myself i probably

couldn't do that anymore from those

stores although then again i haven't

tried because i was really into buying

stuff on etsy during the pandemic and i

kind of lately haven't been which you

know oftentimes like you're your own

best piece of research

you know you're your own best researcher

which i think is quite interesting so uh

people continue okay so here this this

is interesting to me because now we

start learning about the consumer take a

look at this we're emerging from an

unprecedented time this year is going to

be unpredictable for us okay well that's

also bad because right now you're

signaling that hey uh we might have no

idea what's to come well and that there

are many moving parts including both

tailwinds and headwinds and then this is

interesting

i don't like this people continue to be

nervous about global events and the

economy and we'll have to fight harder

for that consumer's time and money so

i'd like to see you know other than just

like overall sale metrics what are what

do they see because see looking at the

last quarter is lagging but when the

executives are like yeah we're gonna

have to fight harder yeah we're gonna

have to try harder and i'm not actually

getting like concrete info it makes me

think they're going to miss again next

quarter

[Music]

as you outread between the lines

remember these are sales pitches and

when a sales pitch is weak

it's a red flag see like

end phases sales pitch last quarter was

like

we don't have supply chain issues in

asics we're going to kill it that's

basically the tone of the ceo

last quarter and i'm like i you know i

looked at the morning of the end phase

earnings call we went through it with uh

course members uh in the old earnings

called the morning of their their second

quarter earnings uh or well we went

through their fourth quarter earnings uh

right before their first quarter

earnings which come out in the second

quarter uh and we're like look look how

like bullish these things are this is

this is like a good leading indicator

for how it might perform or the stock

might perform after earnings or how

their earnings might go and that's

that's exactly what happened uh the

stock ran from like 150 bucks to 188

bucks that's great

okay so uh the deceleration we started

to experience in feb oh okay this is

this is terrible this is terrible this

is the opposite of what you have seen in

the travel sector this is the opposite

of what you've seen in the banking

sector with

arguments that consumers are spending

more look at what they're saying

the deceleration in sales we experienced

in february listen to this line folks

worsened throughout the quarter well

crap you know if you're on if you're

like declining throughout the quarter

like this

then where are we now like if we're here

now you know what's ahead of us that you

know like even more of a decline so uh

oops uh yeah i mean that's that's quite

crazy so uh then you've got from a

graphic geographic perspective 45 of

etsy's marketplace in the first quarter

was from transactions where either uh

the buyer or seller were outside the

united states see that's actually

terrible

it and so let's let's touch on for a

second why that's terrible well it's

terrible because what happens

what happens when you have uh when you

have a situation where the global

economy is slowing down everything's

slowing down in uh europe we just talked

about that at the beginning of this

livestream things are slowing down in

china no doubt you can't get etsy sales

in ukraine because you got a freaking

disaster going on in ukraine so of

course

uh this is a terrible thing for for etsy

i have been enthused by etsy's valuation

coming down but i said i would wait to

earnings and i'm telling you so far this

reiterates to me that there's pain

coming to e-commerce and it is not

stopping anytime soon uh you know look

at this

year over year they had strength because

of germany

dude that's bad i do not want to hang my

hat on germany right now we just saw

that massive manufacturing myth we just

uh heard what the what the uh you know

with the

higher levels over at the ecb are saying

this is a

disaster so the etsy marketplace

category performance was marked by

strength and paper and party supplies

for in-person events how interesting

look at that people are actually

spending more money on the etsy

marketplace right now for in-person

events and stuff consistent with

reopening trends i mean look i hate to

say it but if we're worried like if

we're focused on reopening trends people

are going to spend more of their money

in stores because they're traveling

right not so great on the consumer let's

see what else they say about the

consumer

despite there being more options for

consumers time and money okay great

uh

let's see here the strength of the

second quarter of 2021 was driven by the

tailwinds of economic stimulus which hit

consumer bank accounts in april of 2021.

contrast that with uh with where we are

now mobility indices are approaching

2019 levels and pent-up demand may drive

this even higher meaning the possibility

of more movement and travel and less

time for home shopping dude this is a

horrible earnings call like

i mean like i'm all for like buying

companies when they go down

but i'm not just going to buy a stock

that's down you know 17 because i'm like

oh yeah yolo by the dip this is a

terrible earnings call that's telling me

things are just getting even worse

the reopening and macro uh headwinds and

experiences as a company and of course

are being felt in households and wallets

of independent sellers

[Music]

yeah okay uh what else do we have here

so here's a question from an analyst

you're uh to what extent are you in a

relatively favorable position compared

to your e-commerce peers like you know

shopify or amazon or whatever great

question uh so

they say to be clear etsy sellers set

their own prices not something etsy is

involved in

uh let's see here

obviously it's tougher for them to

compete against something that's

mass-produced you know etsy's a little

bit more custom we know that already

that's why etsy's interesting in the

first place

and let's see here if you look at a

basket of goods analysis not chosen wait

etsy sellers set their own prices it's

not something etsy's involved in we have

said in the past and it continues to be

true that our sellers have so far on

average if you look at a basket of of

goods

uh

not chosen to take their prices up by

much at all okay that's actually a bad

sign and far less than what you're

reading in terms of consumer inflation

so in other words if you want to find

less inflation go to etsy because people

aren't raising their prices well golly

what is that signal to you folks that's

it's a very simple thing there's one

thing that signals to you when sellers

don't raise prices when sellers don't

raise prices what does it mean

you should be telling yourself this

right now

lack of

pricing power

[Laughter]

right like

that's a bad thing

like like look i've only been going

through this earnings call for five

minutes and i'm devastated like this is

bad i honestly don't even want to read

any more of the etsy earnings call

i i got i got enough of the etsy

earnings called like i i got it

your sellers don't have pricing power

y'all uh are on a declining trend of

e-commerce sales which makes me even

less interested in remotely considering

uh the other

uh you know online uh retailers whether

that's

wayfair or or shopify

i'm curious though

because of i kind of want to know like

hey well like does wayfair for example

have pricing power is this just

etsy

my suspicion is

usually what you see is these sorts of

issues are industry-wide they're usually

not

uh

sort of just relegated to one company

it's usually an industry trend this is

why you see like on cnbc all the time

that institutional oh we're rotating

here now we're rotating here now or

whatever right

let's try it let's let's here i got

uh wayfair right here let's do it

together really quickly

all right but just in the last two

months since a lot is transparent and

transpired and rising prices across the

retail universe at troubling

geopolitical events

our mass customers in the us and

internationally appear understandably

more focused on where they are spending

their money okay

this is a horrible thing

our customers appear more focused in

where they're spending their money

okay so in other words our customers ate

shopping at wayfair

it's a terrible thing

uh let's see here while raising well

rising energy prices are headwinds to

shipping and fulfillment some of the

biggest pain from last year uh pains are

dis

dissipating okay well that's actually a

good thing i like i like to hear that

some of so that's kind of like some of

the supply chains and logistic problems

are getting better that's a good thing

for the broader economy doesn't

necessarily mean it's better for

e-commerce right

so let's see here price points okay

doing so cut the distance okay they're

trying to i mean they've always been

talking about adding more fulfillment

centers and therefore lowering the

distance that they have to ship stuff to

lower costs

okay we see customers respond okay

interesting here we go so we are already

benefiting just as availability was

getting better now availability is

getting better at a very fast rate this

is very cathy woodyan actually right

here

availability going up at a faster rate

means inventories are going up right

this is your kathy woodian inventories

and it's something to pay attention to

because that can actually lead to prices

coming

down if you have too high of inventories

uh okay so let's see

what happens is our competitive

retailers what they've done is they've

brought they've bought their inventory

for the next few months already and they

bought it at a certain price and they've

locked in that price

oh my gosh

they're now low to discount oh no

oh no they're now low to discount

because it could put them in a bad

position on retail relative to cost

while on our platform okay this is a

very confusing line here the suppliers

sitting there price ever setting their

price every day and that price is

driving retail wait that i don't know if

that is just a bad transcription but it

is a horrible sentence

but i i think roughly what they're

saying here is

you know

like you don't necessarily want to drop

the price because that signals bad

things for the consumers but basically

you might have to

drop prices and so look at that right

after they talk about having excess

inventory look at what they talk about

if you have extra inventory you just

want to turn it into cash or focus uh or

cash or less focused

or be less focused on the profit margins

this transcription is horrible right so

basically let me

transfer let me re-transcribe this

transcription more inventory focus less

on margin just get the cash that's

essentially what he's saying here or her

whatever i have no idea who it is they

uh

so uh okay also not good

so what else do we have here as well as

an argument to enrich and ensure

accurate and complete product intuition

this enables us to respond to customer

needs

uh

doing so can significantly okay well

that was the distance thing we already

read that we read this section here

okay it's just the opening price point

which is where these folks do their

business at home we have a logistics

network that's optimized for deliveries

we can build okay whatever y'all just

yapping over here

we're not oh look at this look at this

aha

wow

look at the word they're using this is

terrible this is actually like all just

like bad news so far like it's no

surprise to me actually now that the qqq

is selling down because it's like

sorry this is just bad news uh look at

this okay

if we think uh okay right here right

here this part now that said if there is

a transitory change in the piece of a

cost structure that we

manage uh and we think that's going to

abate soon

we're not necessarily going to pass it

through and raise the price of the item

and then drop it little by little

thereafter okay

what what does this mean folks it's

literally the same thing as the etsy

call

they're basically like wayfair is

literally telling us inflation is

transitory so we won't raise prices

because we can't

this is terrible

uh

i laugh because it's painful

uh

it's it's quite painful anyway i was

gonna put that

there we go yeah no this is this is

these are bad these are bad earnings

calls these are not good not happy here

so uh quite bad

uh okay wow so consumers are sucking and

if like those little samples there you

can see it doesn't take a lot of time

those little samples there are just an

example of

disaster so

sorry consumers things are

not good but it is you know when we

start seeing this sort of ecommerce

uh

pain it is a little bit of an indicator

that

maybe we will start seeing the kathy

woody in price drops

maybe she's right

we'll see

we shall see