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Etsy (ETSY)
NASDAQ:ETSY

Etsy (ETSY) AI Stock Analysis

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Etsy

(NASDAQ:ETSY)

Rating:68Neutral
Price Target:
$61.00
▲(8.95%Upside)
The overall stock score reflects Etsy's robust cash flow and operational strengths, but is tempered by financial leverage risks and high valuation. Technical indicators are favorable, while earnings call insights suggest both potential growth and notable challenges due to economic conditions.
Positive Factors
Debt Management
Etsy's new convertible debt provides the company with an attractive means to refinance and extend debt maturities at relatively low cost and no incremental dilution to equity.
Growth Initiatives
Management reallocated 1/3 of the product team towards near-term growth hacking initiatives, potentially driving growth.
Market Sentiment
ETSY stock is up 32% from May 21, indicating a positive shift in market sentiment.
Negative Factors
GMS Performance
Top-line metrics remained under pressure, with consolidated GMS down in the mid-single-digits year-over-year.
Uncertain Growth
ETSY needs follow-through in Q3 GMS and line of sight to positive growth, indicating uncertainty about sustained growth.
Valuation Concerns
ETSY is not considered cheap on GAAP P/E, suggesting valuation concerns.

Etsy (ETSY) vs. SPDR S&P 500 ETF (SPY)

Etsy Business Overview & Revenue Model

Company DescriptionEtsy, Inc. operates two-sided online marketplaces that connect buyers and sellers primarily in the United States, the United Kingdom, Germany, Canada, Australia, France, and India. Its primary marketplace is Etsy.com that connects artisans and entrepreneurs with various consumers. The company also offers Reverb, a musical instrument marketplace; Depop, a fashion resale marketplace; and Elo7, a Brazil-based marketplace for handmade and unique items. In addition, it offers various seller services, including Etsy Payments, a payment processing service; Etsy Ads, an advertising platform; and Shipping Labels, which allows sellers in the United States, Canada, the United Kingdom, Australia, and India to purchase discounted shipping labels. Further, the company provides various seller tools, including Shop Manager dashboard, a centralized hub for Etsy sellers to track orders, manage inventory, view metrics and statistics, and have conversations with their customers; and Sell on Etsy, an application to enable enhanced onboarding and video uploading. Additionally, it offers Etsy seller analytics pages that provides insights regarding traffic acquisition for their shops; Targeted Offers, a sales and promotions tool, and social media tool; and accounting and bookkeeping services. The company also provides educational resources comprising blog posts, video tutorials, Etsy Seller Handbook, Etsy.com online forums, and insights; Etsy Teams, a platform to build personal relationships with other Etsy sellers; and a Star Seller program. As of December 31, 2021, it connected a total of 7.5 million active sellers to 96.3 million active buyers; and had 120 million items for sale. The company was formerly known as Indieco, Inc changed its name to Etsy, Inc. in June 2006. Etsy, Inc. was founded in 2005 and is headquartered in Brooklyn, New York.
How the Company Makes MoneyEtsy makes money primarily through transaction fees, listing fees, and various seller services. The company charges sellers a transaction fee of 6.5% on the sale price of each item sold, which is a significant source of its revenue. Additionally, sellers are required to pay a listing fee for each item listed on the platform, typically $0.20 per item. Etsy also offers optional services that generate revenue, such as Etsy Ads, which allows sellers to advertise their products within the marketplace, and Etsy Payments, a payment processing service that incurs additional fees. Furthermore, Etsy has expanded its revenue streams through partnerships and acquisitions, such as the purchase of Reverb, a marketplace for musical instruments, which contributes to its earnings by diversifying its product categories.

Etsy Key Performance Indicators (KPIs)

Any
Any
Active Buyers
Active Buyers
Tracks the number of unique buyers who have made purchases over a specific period, indicating Etsy's customer base size, engagement level, and potential for future sales growth.
Chart InsightsEtsy's active buyers have plateaued after a pandemic-driven surge, with recent declines reflecting broader economic pressures. The latest earnings call highlights a 3.5% drop in active buyers per transaction, indicating reduced consumer engagement. Despite this, Etsy's strategic focus on personalization and AI-driven experiences shows promise for re-engagement, as evidenced by the successful reactivation of over 6 million buyers. However, macroeconomic headwinds and decreased consumer spending remain significant challenges, potentially impacting future growth.
Data provided by:Main Street Data

Etsy Earnings Call Summary

Earnings Call Date:Apr 30, 2025
(Q1-2025)
|
% Change Since: 21.37%|
Next Earnings Date:Jul 30, 2025
Earnings Call Sentiment Neutral
Etsy's earnings call presented a mixed picture. While there were significant achievements in app performance and personalization initiatives, these were counterbalanced by declines in GMS and active buyer metrics, along with macroeconomic pressures. The company's strategic initiatives show potential for future growth, but current challenges in consumer spending and economic conditions weigh heavily.
Q1-2025 Updates
Positive Updates
App GMS Performance
The Etsy app reached an all-time high of 44.5% of total marketplace GMS, with a year-over-year increase in buyer conversion rate and app downloads.
AI and Personalization Initiatives
Etsy launched a new Discovery Centric Shopping experience using AI for personalized browsing, resulting in nearly double the engagement on personalized homepages compared to non-personalized ones.
Depop's Strong Performance
Depop delivered its best GMS quarterly performance since acquisition, driven by strong growth in the U.S. market.
Improved Take Rate
Consolidated take rate improved to 23.3%, up 170 basis points from the previous year.
Reactivation of Buyers
Etsy successfully reactivated over 6 million buyers, showing a positive trend in re-engagement strategies.
Negative Updates
Decline in GMS
Consolidated GMS was $2.8 billion, down approximately 6.5% year-over-year, with Etsy marketplace GMS down 8.9%.
Net Loss Due to Reverb Sale
Etsy took a non-cash impairment charge of $102 million associated with the anticipated Reverb transaction, leading to a net loss for the quarter.
Decline in Active Buyers
Etsy marketplace active buyer metrics remained muted with a year-over-year decline, primarily attributed to macroeconomic conditions.
Habitual Buyer Decline
The decline in habitual buyers was sharper over the last few quarters, reflecting broader consumer discretionary spending trends.
Macro Challenges
Ongoing external pressure on consumer discretionary spending and potential tariff impacts present challenges to growth.
Company Guidance
During Etsy's Q1 2025 earnings call, the company reported a consolidated gross merchandise sales (GMS) of $2.8 billion, which represented a year-over-year decline of approximately 6.5%, with an 80 basis point headwind from foreign exchange. Despite the decline in GMS, Etsy's revenue increased by 1% year-over-year to $651 million, with a take rate improving to 23.3%. The adjusted EBITDA was $171 million, resulting in a 26.3% margin, slightly ahead of guidance. Etsy's mobile app performance was highlighted, with app GMS reaching an all-time high of 44.5% of total marketplace GMS. Active buyers per transaction decreased by 3.5% year-over-year to $120, while the company's focus on personalization and machine learning is expected to drive future growth. The guidance for Q2 2025 anticipates a GMS decline similar to Q1, with a consolidated adjusted EBITDA margin of approximately 25%.

Etsy Financial Statement Overview

Summary
Etsy demonstrates strong operational management and cash flow generation, but faces challenges in profitability and high leverage. The company has a robust revenue growth yet struggles with negative equity and profitability declines.
Income Statement
70
Positive
Etsy has demonstrated consistent revenue growth over the years, with a notable increase from 2020 to 2025. However, the net profit margin has recently declined, primarily due to a significant drop in net income from 2021 onwards, suggesting challenges in maintaining profitability. Gross profit margins remain strong, indicating that Etsy successfully manages its core operations efficiently.
Balance Sheet
50
Neutral
The balance sheet indicates a high level of leverage, with negative stockholders' equity, signaling potential risks related to financial stability. The debt-to-equity ratio is not calculable due to negative equity, but the high debt levels could pose a risk. Despite this, the company maintains a reasonable level of cash and cash equivalents, which provides some liquidity buffer.
Cash Flow
75
Positive
Etsy's cash flow position appears robust, with strong operating cash flows consistently exceeding net income, indicating good cash generation from operations. Free cash flow has grown over the period, showing effective cash management. However, fluctuations in financing cash flow suggest some instability in financial strategy.
Breakdown
TTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
2.81B2.81B2.75B2.57B2.33B1.73B
Gross Profit
2.03B2.03B1.92B1.82B1.67B1.26B
EBIT
289.95M380.21M279.84M-658.56M465.73M424.01M
EBITDA
544.38M532.65M398.19M-551.11M555.81M465.92M
Net Income Common Stockholders
188.18M303.28M307.57M-694.29M493.51M349.25M
Balance SheetCash, Cash Equivalents and Short-Term Investments
867.70M1.04B1.15B1.17B984.61M1.67B
Total Assets
2.12B2.42B2.69B2.63B3.83B2.40B
Total Debt
98.12M2.39B2.39B2.39B2.39B1.12B
Net Debt
-551.07M1.58B1.48B1.47B1.61B-128.28M
Total Liabilities
3.03B3.18B3.23B3.18B3.20B1.66B
Stockholders Equity
-910.30M-758.87M-543.72M-547.27M628.62M742.42M
Cash FlowFree Cash Flow
718.45M738.26M665.61M652.87M623.38M671.85M
Operating Cash Flow
732.62M752.47M705.51M683.61M651.55M678.96M
Investing Cash Flow
-48.67M-53.10M-73.31M-30.02M-1.56B-11.38M
Financing Cash Flow
-828.94M-787.17M-656.53M-506.48M452.75M119.28M

Etsy Technical Analysis

Technical Analysis Sentiment
Positive
Last Price55.99
Price Trends
50DMA
49.07
Positive
100DMA
49.83
Positive
200DMA
51.72
Positive
Market Momentum
MACD
3.51
Positive
RSI
53.88
Neutral
STOCH
39.62
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ETSY, the sentiment is Positive. The current price of 55.99 is above the 20-day moving average (MA) of 55.09, above the 50-day MA of 49.07, and above the 200-day MA of 51.72, indicating a bullish trend. The MACD of 3.51 indicates Positive momentum. The RSI at 53.88 is Neutral, neither overbought nor oversold. The STOCH value of 39.62 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ETSY.

Etsy Risk Analysis

Etsy disclosed 47 risk factors in its most recent earnings report. Etsy reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Etsy Peers Comparison

Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
81
Outperform
$6.10B14.2519.55%8.38%52.18%
MM
73
Outperform
$3.05B5.6812.92%6.49%-3.77%4607.98%
68
Neutral
$5.84B39.77-39.97%2.18%-32.87%
ANANF
67
Neutral
$3.56B7.3546.98%12.54%25.47%
62
Neutral
$6.82B11.052.80%4.32%2.67%-24.92%
JWJWN
60
Neutral
$4.12B14.1729.58%3.08%2.20%120.00%
WW
44
Neutral
$5.92B17.86%-0.89%46.62%
* Consumer Cyclical Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
ETSY
Etsy
55.99
-2.71
-4.62%
ANF
Abercrombie Fitch
74.66
-111.23
-59.84%
M
Macy's
11.24
-6.26
-35.77%
JWN
Nordstrom
24.66
3.38
15.88%
URBN
Urban Outfitters
68.01
23.53
52.90%
W
Wayfair
46.10
-7.19
-13.49%

Etsy Corporate Events

M&A TransactionsBusiness Operations and Strategy
Etsy Completes Sale of Reverb Holdings Subsidiary
Neutral
Jun 2, 2025

On June 2, 2025, Etsy, Inc. completed the sale of its subsidiary, Reverb Holdings, Inc., a musical instrument marketplace, to Reverb IntermediateCo LLC. This transaction signifies a strategic move by Etsy to streamline its operations and focus more on its core business, potentially impacting its market positioning and stakeholder interests.

The most recent analyst rating on (ETSY) stock is a Hold with a $65.00 price target. To see the full list of analyst forecasts on Etsy stock, see the ETSY Stock Forecast page.

M&A TransactionsBusiness Operations and Strategy
Etsy Agrees to Sell Reverb Holdings, Inc.
Neutral
Apr 22, 2025

On April 21, 2025, Etsy announced its agreement to sell Reverb Holdings, Inc., a musical instrument marketplace, to Reverb IntermediateCo LLC, a subsidiary of Reverb Partners LLC. This decision aligns with Etsy’s strategy to concentrate on expanding its core marketplace and subsidiary Depop. The transaction is expected to close in the coming months, potentially impacting Etsy’s operational focus and market positioning by allowing it to streamline its business efforts.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.