Etsy’s Uncertain Growth Prospects and Rising Costs Lead to Sell Rating

Analyst Ken Gawrelski of Wells Fargo maintained a Sell rating on Etsy, boosting the price target to $57.00.

Ken Gawrelski has given his Sell rating due to a combination of factors impacting Etsy’s financial outlook. The sustainability of Etsy’s growth appears uncertain, particularly if the current challenges in acquiring new buyers persist. Although there is a potential for positive growth in gross merchandise sales (GMS) towards the end of the year, this improvement may be short-lived without a turnaround in buyer acquisition economics.
Additionally, the company’s increased investments, especially in Depop, are expected to reduce EBITDA margins in the latter half of 2025. The decline in active buyers, coupled with rising customer acquisition costs, further complicates the growth scenario. Despite some optimism from management regarding market trends, the elevated marketing expenses and deteriorating buyer metrics present significant hurdles. Consequently, these factors contribute to the Sell rating as the long-term growth prospects remain uncertain.

Gawrelski covers the Communication Services sector, focusing on stocks such as Alphabet Class A, Meta Platforms, and Match Group. According to TipRanks, Gawrelski has an average return of 16.4% and a 63.27% success rate on recommended stocks.