By Eli Levi and Amalya Teitelbaum, Business Editors
Each month’s edition of the YU Observer will include a “Stock Highlight” on a few stocks that have been in the news lately, have fascinating stories, or provide an exciting read. On behalf of the YU Observer, we’d like to remind everyone that these stock picks are for educational purposes only and are not to be taken as financial advice or used for investing real cash. This month, for our September 2022 edition, we will be highlighting Pinterest and Etsy.
Pinterest stock actually seems to be doing well compared to some of the lows it has faced and, in general when entering a possible recession or during a bear market, it is always smart to buy the dip. Therefore, now might not be the best time to add Pinterest to one’s portfolio. When looking at the macro conditions and general trends during a bear market, there tends to be significant consolidation. This means that larger players such as Amazon, Microsoft, and Meta are looking for possible acquisitions. Decreased stock prices make this option more attractive, despite the fact that companies may be trying to conserve cash. Pinterest is a prime example of a company whose stock price has historically suffered and has had trouble sustaining its bottom line. All of these sound like negatives and they are, but Pinterest still has a large user base that could potentially be valuable to several companies. As an individual company, it might not be profitable, but when put into a larger framework of a Meta or Microsoft, there is real value. Thus, Pinterest is a strong M&A target. I actually think Snapchat and Twitter fall into this category as well. However, Twitter is currently mixed up in the whole Musk fiasco and Snapchat is controlled entirely by Evan Spiegel, who has refused to sell time and time again, making Pinterest a more likely target for acquisition If Pinterest were to be acquired, the buyer would most likely pay around a 30% premium on the stock price. 30% returns sound pretty good to me.
While this is a website that many know of, few ever step back and think about its potential in the stocks and finance sector. It’s often just looked at as a site for cute DIY projects and arts and crafts. When taking a look at its recent and perceived upcoming stock rates, one will find that there is another angle to consider. Etsy operates a global marketplace where people can make, sell, and buy unique, personalized goods online. The company also offers various services to support its sellers. The market has seen a massive uptick in Etsy stock prices starting back in April 2020, when many users were rushing to sites like Etsy in attempts to open small businesses during Covid. In 2021, the market saw stock Etsy prices as high as $300. Currently, the stocks for Etsy are valued at $107.50. While this is certainly a decrease from past years, the prices seem to be on the rise again. The Etsy stock price rose 1.01% on the last trading day (Thursday, 15th Sep 2022), rising from $111.23 to $112.35. It has now gained 3 days in a row. This may seem something to be taken with caution, as it has the potential to be short-term. But there have been many times when a stock in the lower part of a wide and strong rising trend in the short term, potentially poses as a very good buying opportunity. Statisticians have predicted that, given this current short-term trend, Etsy stock is expected to rise 44.44% over the proceeding 3 months and, with a 90% probability, hold a price between $156.57 and $194.88 at the end of this 3-month period. While investors are welcome to treat this specific stock with caution, it seems very probable that the market will see an increase in Etsy stock very soon.