Etsy (ETSY) AI Stock Analysis

• Market Cap: $4.66B
• Dividend Yield: N/A
• Average Volume (3M): 4.55M
• Price to Earnings (P/E): 17.9
• Beta (1Y): 0.83
• Revenue Growth: 2.18%
• EPS Growth: 5.77%
• Country: US
• Employees: 2,400
• Sector: Consumer Cyclical
• Sector Strength: 60
• Industry: Specialty Retail
• EPS (TTM): 2.37
• Shares Outstanding: 107,072,350
• 10 Day Avg. Volume: 5,003,725
• 30 Day Avg. Volume: 4,545,417
• PEG Ratio: 3.11
• Price to Book (P/B): N/A
• Price to Sales (P/S): 1.72
• Price to Cash Flow (P/CF): 3.80
• P/FCF Ratio: 3.80
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $51.00
• Price Target Upside: 15.52% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 26

Etsy's overall score reflects strong revenue growth and operational efficiency but is tempered by balance sheet risks and bearish technical indicators. The earnings call and recent executive changes suggest strategic initiatives to overcome current challenges, though near-term pressures persist.

Positive Factors

Social Commerce Improvement

ETSY is enhancing its social commerce offering through optimized search/discovery, mobile adoption, and increased frequency, potentially supporting better GMS trends.

Strong Profit Profile

Etsy maintained solid adjusted EBITDA margins and a strong free cash flow conversion, underscoring its attractive profit profile.

Negative Factors

Demand Headwinds

Etsy could face demand headwinds as sellers look to pass incremental costs onto consumers, resulting in increased pricing across the industry.

Macro Headwinds

Macro headwinds and Etsy's shift in product investments towards long-term growth initiatives have resulted in a near-term GMS opportunity cost.

Weakened Buyer Metrics

Buyer and cohort metrics continue to weaken, with concerns over net additions hitting a new low and customer acquisition costs increasing by 16% year over year.

Etsy Business Overview & Revenue Model

Company Description

Etsy, 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 Money

Etsy generates revenue primarily through three key streams: marketplace revenue, services revenue, and other revenue. Marketplace revenue is derived from the fees charged to sellers for listing items and a transaction fee on sales completed on their platform. Services revenue encompasses the additional services Etsy offers to sellers, such as advertising, payment processing, and shipping labels. These services help sellers increase their visibility and manage their businesses more efficiently. Other revenue includes fees from the company's wholesale operations and any experimental or new business initiatives. Etsy's earnings are also influenced by significant partnerships and strategic investments, which enhance their platform capabilities and expand their market reach.

Etsy Financial Statement Overview

Summary

Etsy shows strong revenue growth and operational efficiency with healthy margins. However, the balance sheet poses significant risks with negative equity and high liabilities, offset by a strong cash flow position.

Income Statement

Etsy shows strong revenue growth with a 3.3% increase from the previous year. The gross profit margin is solid at 72.4%, indicating efficient cost management. However, the net profit margin has decreased slightly to 10.8%, reflecting some pressure on bottom-line profitability. The EBIT and EBITDA margins are healthy, suggesting good operating performance.

Balance Sheet

The company's balance sheet reflects a challenging position with negative stockholders' equity, primarily due to high total liabilities. The debt-to-equity ratio is not calculable due to negative equity, indicating financial risk. The equity ratio is also negative, underscoring balance sheet weaknesses despite a strong cash position.

Cash Flow

Etsy's free cash flow grew by 10.9%, highlighting strong cash generation capabilities. The operating cash flow to net income ratio is robust, indicating efficient cash flow utilization. However, the free cash flow to net income ratio suggests room for improvement in converting profits into free cash flow.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
2.81B	2.75B	2.57B	2.33B	1.73B
	Gross Profit
2.03B	1.92B	1.82B	1.67B	1.26B
	EBIT
380.21M	279.84M	-658.56M	465.73M	424.01M
	EBITDA
532.65M	398.19M	-551.11M	555.81M	465.92M
	Net Income Common Stockholders
303.28M	307.57M	-694.29M	493.51M	349.25M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
1.04B	1.15B	1.17B	984.61M	1.67B
	Total Assets
2.42B	2.69B	2.63B	3.83B	2.40B
	Total Debt
2.39B	2.39B	2.39B	2.39B	1.12B
	Net Debt
1.58B	1.48B	1.47B	1.61B	-128.28M
	Total Liabilities
3.18B	3.23B	3.18B	3.20B	1.66B
	Stockholders Equity
-758.87M	-543.72M	-547.27M	628.62M	742.42M
Cash Flow		Free Cash Flow
738.26M	665.61M	652.87M	623.38M	671.85M
	Operating Cash Flow
752.47M	705.51M	683.61M	651.55M	678.96M
	Investing Cash Flow
-53.10M	-73.31M	-30.02M	-1.56B	-11.38M
	Financing Cash Flow
-787.17M	-656.53M	-506.48M	452.75M	119.28M

Etsy Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 44.15
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ETSY, the sentiment is Negative. The current price of 44.15 is below the 20-day moving average (MA) of 45.38, below the 50-day MA of 48.31, and below the 200-day MA of 53.21, indicating a bearish trend. The MACD of -1.36 indicates Positive momentum. The RSI at 45.03 is Neutral, neither overbought nor oversold. The STOCH value of 43.65 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ETSY.

Etsy Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
URBN	79 Outperform	$4.42B	11.60	17.56%	―	7.71%	40.01%
M	69 Neutral	$3.12B	5.42	13.40%	6.39%	-3.60%	442.87%
JWN	64 Neutral	$3.98B	13.66	29.58%	3.19%	2.20%	120.00%
ETSY	63 Neutral	$4.66B	17.93	-39.97%	―	2.18%	5.77%
ANF	61 Neutral	$3.45B	6.48	47.77%	―	15.60%	71.45%
Sector *	60 Neutral	$7.23B	11.55	3.67%	4.04%	2.96%	-13.54%
W	30 Underperform	$3.38B	―	17.86%	―	-1.27%	38.07%

Etsy Corporate Events

Etsy Approves 2024 Inducement Plan for New Employees

Etsy’s Board of Directors has approved the 2024 Inducement Plan, reserving 1,000,000 shares of common stock for issuance to new employees or rehired individuals as a material inducement for employment. The plan requires approval from a majority of Independent Directors or the Compensation Committee, aligning with Nasdaq’s exemption rules, and follows terms similar to the existing 2024 Equity Incentive Plan.