Etsy, Inc. (ETSY) | Investment Case

1. Company Snapshot

1.a. 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.

Show Full description

1.b. Last Insights on ETSY

Etsy's recent performance was negatively impacted by declining gross merchandise sales, which peaked in 2021 and have been steadily decreasing. The company's sale of Depop to eBay likely reflects a strategic shift to streamline operations. Despite beating EPS estimates, Etsy's Q4 revenue slightly missed expectations. Additionally, institutional investors such as Campbell & CO Investment Adviser LLC have decreased their holdings in the company. Etsy's marketplace experienced a slight return to growth in Q4 2025, but challenges persist.

1.c. Company Highlights

Last Price	51.64
Change Percentage	3.34%
Open	49
Previous Close	49.97
Market Cap ( Millions)	5097
Volume	1942234
Year High	76.52
Year Low	40.05
M A 50	52.88
M A 200	58.2

FCF Yield	13.72%
Dividend Yield	0.00%
ROE	-15.36%
Debt / Equity	-287.12%
Net Debt / EBIDTA	368.89%
Price To Book	-4.62
Price Earnings Ratio	31.12
Price To FCF	7.29
Price To sales	1.77
EV / EBITDA	14.39

2. Etsy Delivers Record Revenue and Growth

Etsy reported a strong fourth quarter with consolidated revenue reaching $882 million, up 6.6% year-over-year, excluding Reverb, a new quarterly record. Adjusted EBITDA was $222 million, representing a consolidated adjusted EBITDA margin of 25.2%. Earnings per share (EPS) came in at $2.25, significantly beating estimates of $0.88. The company's Etsy marketplace GMS grew 0.1% year-over-year, marking the first positive comparison since Q3 2023.

Publication Date: Feb -20

                                    📋 Highlights
                                    Depop Divestiture:
                                                Sold for $1.2 billion in cash to focus on Etsy's core marketplace growth.
Q4 Etsy GMS Growth:
                                                Achieved 0.1% year-over-year growth, first positive comparison since Q3 2023, with 9pp improvement in Q1-Q4 comparisons.
2026 Strategic Priorities:
                                                Focused on discovery, matching, loyalty, and differentiation, driving app home screen clicks up 14% YoY.
Agentic Commerce Growth:
                                                Agentic traffic grew 15x YoY (under 1% of total), showing higher intent and average order value.
Financial Strength:
                                                Ended 2025 with $1.8 billion in cash and $735 million in adjusted EBITDA, converting 87% to free cash flow.

                                

Operational Highlights

The company's efforts to improve the customer experience and lean into its strengths are starting to pay off. Etsy marketplace GMS comparisons improved by 9 percentage points from the first to the fourth quarter. The company is seeing traction in its four priority areas: discovery, matching, loyalty, and differentiation. Notably, the trailing 12-month active buyer count in the United States increased slightly from Q3 to Q4, and U.S. buyer GMS grew 0.3% year-over-year, marking the first quarter of positive growth in four years.

Growth Prospects

Etsy is well-positioned for growth in 2026, with expected GMS growth of 2% to 4% in the first quarter. The company's focus on agentic commerce and AI-powered discovery is expected to drive more visits, better engagement, and higher conversion rates. As Kruti Goyal noted, "We're seeing encouraging signs that agentic can be a valuable and incremental discovery channel for Etsy." With a strong track record of innovation and adaptability, Etsy is poised for continued growth.

Valuation

With a P/E Ratio of 14.31 and an EV/EBITDA of 9.35, Etsy's valuation appears reasonable given its growth prospects. The company's Free Cash Flow Yield of 13.82% is also attractive. As Etsy continues to execute on its strategic priorities, investors may want to keep a close eye on the company's progress.

3. NewsRoom

3 Stocks to Sell Before Earnings Season

04:30

Source: fool.com

Bet on These 4 Top-Performing Liquid Stocks to Maximize Returns

Apr -01

Source: zacks.com

Down 82% From Its Record, Is This a Top Undervalued Growth Stock to Buy in 2026?

Mar -22

Source: fool.com

Stock Markets Falling: 1 Ridiculously Cheap Stock Investors Can Buy Amid the Selling

Mar -20

Source: fool.com

Critical Analysis: Etsy (NYSE:ETSY) and Andersen Group (NYSE:ANDG)

Mar -19

Source: defenseworld.net

Etsy (ETSY) Just Overtook the 20-Day Moving Average

Mar -17

Source: zacks.com

3 E-Commerce Stocks Trading at a Discount: Wayfair, Etsy, and Carvana

Mar -11

Source: 247wallst.com

14,836 Shares in Etsy, Inc. $ETSY Purchased by Intech Investment Management LLC

Mar -09

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.77%)

6. Segments

Marketplace

Expected Growth: 5.5%

Etsy's marketplace growth of 5.5% is driven by increasing active buyers and sellers, expansion into new categories, and improved user experience. Strong demand for unique, handmade, and vintage items, as well as growing adoption of e-commerce, contribute to the growth. Additionally, Etsy's investments in marketing, shipping, and payment capabilities enhance the overall platform experience, attracting more buyers and sellers.

Services

Expected Growth: 6.5%

Etsy's 6.5% growth is driven by increasing demand for unique, handmade, and vintage items, as well as the platform's expanding presence in international markets. Additionally, the company's focus on improving user experience, enhancing search functionality, and investing in marketing efforts have contributed to its growth.

7. Detailed Products

Handmade Products

Unique, handmade items such as jewelry, clothing, accessories, and home decor created by independent sellers.

Vintage Items

Gently used, unique, and rare items from past decades, including clothing, accessories, and home decor.

Craft Supplies

Materials and tools for crafting, including fabric, yarn, beads, and other creative materials.

Digital Goods

Digital files, such as printables, templates, and tutorials, for creative projects and small businesses.

Etsy Payments

A payment processing system for sellers to manage transactions and track sales.

Etsy Ads

A platform for sellers to advertise their products and reach a targeted audience.

Etsy Plus

A subscription-based service offering additional features and tools for sellers to manage and grow their business.

8. Etsy, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Etsy's unique marketplace model and strong brand recognition reduce the threat of substitutes, but some customers may still opt for alternative platforms or DIY solutions.

Bargaining Power Of Customers

Individual customers have limited bargaining power due to Etsy's large customer base and the platform's ability to attract new buyers.

Bargaining Power Of Suppliers

Etsy's large supplier base and the ease of onboarding new sellers reduce the bargaining power of individual suppliers.

Threat Of New Entrants

While entering the market requires significant investment, new entrants could potentially disrupt Etsy's market share if they offer innovative features or better user experiences.

Intensity Of Rivalry

The online marketplace industry is highly competitive, with established players like Amazon and eBay, as well as niche platforms, competing for market share.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	129.46%
Debt Cost	3.95%
Equity Weight	-29.46%
Equity Cost	13.94%
WACC	1.00%
Leverage	-439.48%

11. Quality Control: Etsy, Inc. passed 5 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Ulta Beauty

A-Score: 5.3/10

Value: 2.9

Growth: 7.7

Quality: 6.3

Yield: 0.0

Momentum: 9.0

Volatility: 6.0

1-Year Total Return ->

Etsy

A-Score: 5.3/10

Value: 7.0

Growth: 7.8

Quality: 7.1

Yield: 0.0

Momentum: 6.0

Volatility: 3.7

1-Year Total Return ->

Advance Auto Parts

A-Score: 5.0/10

Value: 9.4

Growth: 1.4

Quality: 4.1

Yield: 5.0

Momentum: 8.0

Volatility: 2.3

1-Year Total Return ->

Wayfair

A-Score: 4.3/10

Value: 5.7

Growth: 4.6

Quality: 4.0

Yield: 0.0

Momentum: 9.5

Volatility: 2.3

1-Year Total Return ->

Carvana

A-Score: 4.0/10

Value: 0.4

Growth: 7.4

Quality: 6.4

Yield: 0.0

Momentum: 8.0

Volatility: 1.7

1-Year Total Return ->

A-Score: 2.2/10

Value: 3.8

Growth: 2.9

Quality: 3.4

Yield: 0.0

Momentum: 1.0

Volatility: 2.0

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

-10.61%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

1.00%

Etsy, Inc. - US29786A1060

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on ETSY

1.c. Company Highlights

Higher Growth

Average Quality

Stable Momentum

Earnings Miss

Weak Momentum

Average Yield

Revenues Beats

Average Growth

Revenues Miss

Better Quality

Earnings Beats

Strong Momentum

2. Etsy Delivers Record Revenue and Growth

Operational Highlights

Growth Prospects

Valuation

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.77%)

6. Segments

Marketplace

Expected Growth: 5.5%

Services

Expected Growth: 6.5%

7. Detailed Products

Handmade Products

Vintage Items

Craft Supplies

Digital Goods

Etsy Payments

Etsy Ads

Etsy Plus

8. Etsy, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Etsy, Inc. passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

51.64$

Current Price

51.64$

Potential

0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA