Etsy Right-Sizes Business Amid Market Challenges
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 21 hours ago
0mins
Should l Buy ETSY?
Source: NASDAQ.COM
- Performance Decline: Etsy's active seller and buyer growth plummeted to 21% and 1.5% in 2023 and 2024, respectively, indicating a weakening post-pandemic market demand that exposes the company to intensified competition, particularly from Amazon and other discount e-commerce platforms.
- Acquisition Impact: Although Etsy expanded its ecosystem through acquisitions of Reverb, Depop, and Elo7 from 2019 to 2021, these purchases ultimately compressed profit margins, adversely affecting the company's overall financial health.
- Business Streamlining: To counter market pressures, Etsy sold Reverb, Depop, and Elo7 over the past three years, aiming to streamline operations and boost advertising revenue while tightening spending to improve take rates, with a slight growth in GMS expected in 2025.
- Future Outlook: Analysts project that from 2025 to 2028, Etsy's revenue and adjusted EBITDA will grow at compound annual growth rates of 1% and 5%, respectively, signaling that while the high-growth phase has ended, the company is focused on strengthening its core business to navigate future challenges.
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Analyst Views on ETSY
Wall Street analysts forecast ETSY stock price to rise
26 Analyst Rating
6 Buy
18 Hold
2 Sell
Hold
Current: 63.480
Low
52.00
Averages
67.71
High
80.00
Current: 63.480
Low
52.00
Averages
67.71
High
80.00
About ETSY
Etsy, Inc. operates two-sided online marketplaces that connect buyers and sellers around the world. The Company's primary marketplace, Etsy.com, is the global destination for goods made by independent sellers. In addition to its core Etsy marketplace, its House of Brand consists of Depop Limited (Depop), which is its fashion resale marketplace. Each marketplace primarily operates independently, while benefiting from shared expertise in product development, marketing, technology, and customer support. The Company's top six retail categories on the Etsy marketplace include homewares and home furnishings, jewelry and personal accessories, apparel, craft supplies, paper and party supplies, and toys and games.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Founder's Story: LTK co-founder Amber Venz Box shared her journey of starting a blog in 2010 to transition her offline personal shopping business online, culminating in the LTK platform achieving $6 billion in annual retail sales and driving the creator economy forward.
- Business Model: LTK generates revenue by taking a transaction fee on every sale, providing creators with essential tools and infrastructure to connect with 8,000 retailers, ensuring they can earn commissions on product recommendations and achieve economic success.
- Platform Innovation: LTK recently launched a new operating system for creator commerce, leveraging hundreds of billions of data points to help brands find the right creators, enhancing the efficiency of brand-creator matching and fostering continuous innovation in the industry.
- Industry Outlook: With the rapid growth of the creator economy, LTK aims to democratize the connection between creators and brands by offering tools for free, anticipating significant growth in the industry and further solidifying LTK's leadership position in the market.
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Etsy's Stock Drops to $64, Future Potential Draws Attention
- Stock Decline: Etsy's stock peaked at $296.91 on November 24, 2021, but has since fallen to around $64, indicating a slowdown in growth and negative impacts from messy acquisitions.
- Declining Growth Metrics: In 2023 and 2024, Etsy's year-over-year growth rates for active sellers and buyers dropped to 21% and 1.5%, respectively, while gross merchandise sales (GMS) experienced negative growth, reflecting weakened market demand post-pandemic.
- Acquisition Impact: Etsy's acquisitions from 2019 to 2021, including Reverb and Depop, initially boosted revenues but led to margin compression and increased business complexity, adversely affecting overall profitability.
- Future Outlook: Although Etsy's high-growth phase is over, analysts project revenue and adjusted EBITDA growth rates of 1% and 5% from 2025 to 2028, suggesting a gradual recovery of its core business.
See More
Etsy Right-Sizes Business Amid Market Challenges
- Performance Decline: Etsy's active seller and buyer growth plummeted to 21% and 1.5% in 2023 and 2024, respectively, indicating a weakening post-pandemic market demand that exposes the company to intensified competition, particularly from Amazon and other discount e-commerce platforms.
- Acquisition Impact: Although Etsy expanded its ecosystem through acquisitions of Reverb, Depop, and Elo7 from 2019 to 2021, these purchases ultimately compressed profit margins, adversely affecting the company's overall financial health.
- Business Streamlining: To counter market pressures, Etsy sold Reverb, Depop, and Elo7 over the past three years, aiming to streamline operations and boost advertising revenue while tightening spending to improve take rates, with a slight growth in GMS expected in 2025.
- Future Outlook: Analysts project that from 2025 to 2028, Etsy's revenue and adjusted EBITDA will grow at compound annual growth rates of 1% and 5%, respectively, signaling that while the high-growth phase has ended, the company is focused on strengthening its core business to navigate future challenges.
See More
Etsy Shares Continue Rise, Showing Signs of Recovery
- Stock Price Increase: Etsy's shares rose 0.31% to $65.39 in afternoon trading on Wednesday, continuing an eight-session rally that reflects market confidence in its future performance.
- Strong Relative Performance: Between April 13 and 21, Etsy's stock surged approximately 17.8%, significantly outperforming the S&P 500's 2.58% increase during the same period, indicating its robust position in the market.
- Analyst Ratings: According to Seeking Alpha's Quant Rating system, Etsy holds a rating of 3.38, categorized as a Hold, with an A+ for revisions but a D+ for growth, suggesting cautious optimism regarding its future potential.
- Signs of Business Transformation: Analysts noted that following the divestment of Depop, Etsy is seeing improved core platform trends and potential EBITDA growth, with the company aiming for positive GMS growth by 2026, indicating early signs of recovery.
See More
Etsy's Surprising Continuous Growth Amid Challenges
- Sustained Revenue Growth: Despite Etsy's stock price falling 53% from its 2023 peak, the company has achieved three consecutive years of single-digit revenue growth, demonstrating resilience in a challenging market environment.
- Declining Sales Figures: Etsy's gross merchandise sales have slightly declined each year for the past three years; however, the company is seeking growth by broadening its offerings and increasing its take rate, which could lead to seller dissatisfaction in the future.
- Strategic Sale of Depop: Etsy sold its fast-growing secondhand fashion platform, Depop, to eBay for $1.2 billion, which may result in short-term revenue decline, yet investors appreciate Etsy's focus on its core business, potentially paving the way for future growth.
- Market Leadership: Although the number of active sellers has declined for two consecutive years, Etsy still boasts 8,762 active sellers and maintains its leadership position in its niche, with expectations to return to gross merchandise sales growth in the future, signaling new opportunities ahead.
See More
Etsy's Gross Merchandise Sales Decline for Three Consecutive Years
- Sales Decline: Etsy's gross merchandise sales have declined for three consecutive years, and while its active seller count rose by 8% to 8,762 last year, the overall business faces challenges, indicating limited growth potential for the platform.
- Depop Sale Impact: Etsy sold its fashion-forward secondhand store, Depop, to eBay for $1.2 billion, which may impact revenue in the short term; however, the company aims to strengthen its financial position by focusing on its flagship business, despite Depop's faster growth.
- Market Performance Rebound: Despite expectations of declining revenue, Etsy's stock has risen 46% over the past year, reflecting market confidence in its future potential, especially as the pandemic ignited a surge in artistic creation that could drive platform activity again.
- Future Growth Outlook: Etsy anticipates a return to gross merchandise sales growth by 2026; despite challenges, the company is working to drive business development by broadening product offerings and increasing take rates, demonstrating its leadership in the social e-commerce space.
See More
LTK Platform Achieves $6 Billion in Annual Retail Sales
- Founder's Story: LTK co-founder Amber Venz Box shared her journey of starting a blog in 2010 to transition her offline personal shopping business online, culminating in the LTK platform achieving $6 billion in annual retail sales and driving the creator economy forward.
- Business Model: LTK generates revenue by taking a transaction fee on every sale, providing creators with essential tools and infrastructure to connect with 8,000 retailers, ensuring they can earn commissions on product recommendations and achieve economic success.
- Platform Innovation: LTK recently launched a new operating system for creator commerce, leveraging hundreds of billions of data points to help brands find the right creators, enhancing the efficiency of brand-creator matching and fostering continuous innovation in the industry.
- Industry Outlook: With the rapid growth of the creator economy, LTK aims to democratize the connection between creators and brands by offering tools for free, anticipating significant growth in the industry and further solidifying LTK's leadership position in the market.
See More
Etsy's Stock Drops to $64, Future Potential Draws Attention
- Stock Decline: Etsy's stock peaked at $296.91 on November 24, 2021, but has since fallen to around $64, indicating a slowdown in growth and negative impacts from messy acquisitions.
- Declining Growth Metrics: In 2023 and 2024, Etsy's year-over-year growth rates for active sellers and buyers dropped to 21% and 1.5%, respectively, while gross merchandise sales (GMS) experienced negative growth, reflecting weakened market demand post-pandemic.
- Acquisition Impact: Etsy's acquisitions from 2019 to 2021, including Reverb and Depop, initially boosted revenues but led to margin compression and increased business complexity, adversely affecting overall profitability.
- Future Outlook: Although Etsy's high-growth phase is over, analysts project revenue and adjusted EBITDA growth rates of 1% and 5% from 2025 to 2028, suggesting a gradual recovery of its core business.
See More
Etsy Right-Sizes Business Amid Market Challenges
- Performance Decline: Etsy's active seller and buyer growth plummeted to 21% and 1.5% in 2023 and 2024, respectively, indicating a weakening post-pandemic market demand that exposes the company to intensified competition, particularly from Amazon and other discount e-commerce platforms.
- Acquisition Impact: Although Etsy expanded its ecosystem through acquisitions of Reverb, Depop, and Elo7 from 2019 to 2021, these purchases ultimately compressed profit margins, adversely affecting the company's overall financial health.
- Business Streamlining: To counter market pressures, Etsy sold Reverb, Depop, and Elo7 over the past three years, aiming to streamline operations and boost advertising revenue while tightening spending to improve take rates, with a slight growth in GMS expected in 2025.
- Future Outlook: Analysts project that from 2025 to 2028, Etsy's revenue and adjusted EBITDA will grow at compound annual growth rates of 1% and 5%, respectively, signaling that while the high-growth phase has ended, the company is focused on strengthening its core business to navigate future challenges.
See More
Etsy Shares Continue Rise, Showing Signs of Recovery
- Stock Price Increase: Etsy's shares rose 0.31% to $65.39 in afternoon trading on Wednesday, continuing an eight-session rally that reflects market confidence in its future performance.
- Strong Relative Performance: Between April 13 and 21, Etsy's stock surged approximately 17.8%, significantly outperforming the S&P 500's 2.58% increase during the same period, indicating its robust position in the market.
- Analyst Ratings: According to Seeking Alpha's Quant Rating system, Etsy holds a rating of 3.38, categorized as a Hold, with an A+ for revisions but a D+ for growth, suggesting cautious optimism regarding its future potential.
- Signs of Business Transformation: Analysts noted that following the divestment of Depop, Etsy is seeing improved core platform trends and potential EBITDA growth, with the company aiming for positive GMS growth by 2026, indicating early signs of recovery.
See More
Etsy's Surprising Continuous Growth Amid Challenges
- Sustained Revenue Growth: Despite Etsy's stock price falling 53% from its 2023 peak, the company has achieved three consecutive years of single-digit revenue growth, demonstrating resilience in a challenging market environment.
- Declining Sales Figures: Etsy's gross merchandise sales have slightly declined each year for the past three years; however, the company is seeking growth by broadening its offerings and increasing its take rate, which could lead to seller dissatisfaction in the future.
- Strategic Sale of Depop: Etsy sold its fast-growing secondhand fashion platform, Depop, to eBay for $1.2 billion, which may result in short-term revenue decline, yet investors appreciate Etsy's focus on its core business, potentially paving the way for future growth.
- Market Leadership: Although the number of active sellers has declined for two consecutive years, Etsy still boasts 8,762 active sellers and maintains its leadership position in its niche, with expectations to return to gross merchandise sales growth in the future, signaling new opportunities ahead.
See More
Etsy's Gross Merchandise Sales Decline for Three Consecutive Years
- Sales Decline: Etsy's gross merchandise sales have declined for three consecutive years, and while its active seller count rose by 8% to 8,762 last year, the overall business faces challenges, indicating limited growth potential for the platform.
- Depop Sale Impact: Etsy sold its fashion-forward secondhand store, Depop, to eBay for $1.2 billion, which may impact revenue in the short term; however, the company aims to strengthen its financial position by focusing on its flagship business, despite Depop's faster growth.
- Market Performance Rebound: Despite expectations of declining revenue, Etsy's stock has risen 46% over the past year, reflecting market confidence in its future potential, especially as the pandemic ignited a surge in artistic creation that could drive platform activity again.
- Future Growth Outlook: Etsy anticipates a return to gross merchandise sales growth by 2026; despite challenges, the company is working to drive business development by broadening product offerings and increasing take rates, demonstrating its leadership in the social e-commerce space.
See More
