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Etsy Inc (ETSY)
:ETSY
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Etsy
(NASDAQ:ETSY)
63Neutral
Positive Factors
Financial Performance
Etsy maintained solid Adj. EBITDA margins and a strong free cash flow conversion, highlighting its attractive profit profile.
Social Commerce
Etsy is improving its social commerce offering via optimized search/discovery, shift to mobile, and higher frequency, which could support improved GMS trends.
Negative Factors
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.
Gross Merchandise Sales
Etsy's gross merchandise sales growth further decelerated in the fourth quarter with a core decline of 9% year over year due to a tough macroeconomic environment and a shift away from short-payback research and development.
Macroeconomic Headwinds
Exposure to macroeconomic headwinds across discretionary spending limits long-term top-line trends for Etsy.
Etsy (ETSY) vs. S&P 500 (SPY)
Market Cap
$5.18B
Dividend YieldN/A
Average Volume (3M)4.41M
Price to Earnings (P/E)18.7
Beta (1Y)0.91
Revenue Growth2.18%
EPS Growth5.77%
CountryUS
Employees2,400
SectorConsumer Cyclical
Sector Strength46
IndustrySpecialty Retail
Share Statistics
EPS (TTM)2.37
Shares Outstanding107,072,350
10 Day Avg. Volume4,652,322
30 Day Avg. Volume4,414,328
Financial Highlights & Ratios
PEG Ratio3.24
Price to Book (P/B)N/A
Price to Sales (P/S)1.72
Price to Cash Flow (P/CF)3.80
P/FCF Ratio3.80
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$54.22Price Target Upside22.06% Upside
Rating ConsensusHold
Number of Analyst Covering25
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 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.75
Positive
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.60
Neutral
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.70
Positive
| 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
Negative
44.42
Price Trends
50.35
Negative
52.53
Negative
53.91
Negative
Market Momentum
-0.94
Negative
52.33
Neutral
80.78
Negative
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 44.42 is below the 20-day moving average (MA) of 46.46, below the 50-day MA of 50.35, and below the 200-day MA of 53.91, indicating a bearish trend. The MACD of -0.94 indicates Negative momentum. The RSI at 52.33 is Neutral, neither overbought nor oversold. The STOCH value of 80.78 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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 (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $4.19B | 10.61 | 17.56% | ― | 7.71% | 40.01% | |
69 Neutral | $3.18B | 5.52 | 13.40% | 6.17% | -3.60% | 442.87% | |
66 Neutral | $4.00B | 13.76 | 29.58% | 3.17% | 2.20% | 120.00% | |
63 Neutral | $5.18B | 18.73 | -39.97% | ― | 2.18% | 5.77% | |
61 Neutral | $3.43B | 6.85 | 47.77% | ― | 15.60% | 71.45% | |
59 Neutral | $12.18B | 11.09 | -1.08% | 3.77% | 1.26% | -19.82% | |
46 Neutral | $3.18B | ― | 17.86% | ― | -1.27% | 38.07% |
* Consumer Cyclical Sector Average
Performance Comparison
ETSY
Etsy
44.42
-21.68
-32.80%
ANF
Abercrombie Fitch
73.33
-46.09
-38.59%
M
Macy's
11.38
-7.30
-39.08%
JWN
Nordstrom
23.34
4.53
24.08%
URBN
Urban Outfitters
46.61
6.90
17.38%
W
Wayfair
26.05
-39.32
-60.15%
Etsy Earnings Call Summary
Earnings Call Date: Feb 19, 2025 | % Change Since: -22.46% | Next Earnings Date: Apr 30, 2025
Earnings Call Sentiment Neutral
The earnings call reflects a mixed picture for Etsy in 2024. While the company achieved record revenue and maintained strong profitability, it faced significant challenges with declining GMS and a decrease in active sellers. Strong growth in Depop and improvements in Etsy Ads were notable positives. The company is optimistic about its strategic pivot towards long-term growth and differentiation, but near-term challenges persist.Highlights
Record Revenue in 2024
Etsy achieved record revenue of $2.8 billion in 2024, marking a 2% increase year over year.
Strong Profitability
Adjusted EBITDA reached $782 million with margins of 27.8%, indicating strong profitability.
Depop's Significant Growth
Depop experienced a 32% increase in GMS year over year, with the US market growing by 60%, making it the fastest-growing US fashion resale player.
Etsy Ads Contribution
Etsy Ads was a key driver of services revenue growth, contributing to a consolidated take rate of 22.8% in Q4, up from the prior year.
2025 Product Development Strategy
Etsy plans to rebalance its product development strategy to accelerate product experimentation and focus on near-term growth while continuing long-term improvements.
Lowlights
Decline in Consolidated GMS
Consolidated GMS was down 4% from 2023 to $12.6 billion. In Q4 2024, GMS declined by 6.8% year over year.
Core Etsy Marketplace Performance
The core Etsy marketplace's GMS declined 8.6% year over year, leading to softer than anticipated consolidated GMS.
Decrease in Active Sellers
The number of active sellers decreased due to new seller setup fees and enhanced trust and safety efforts, resulting in a healthier but smaller seller base.
Reverb's Performance Challenges
Reverb's GMS was down 2.6% year over year, although it performed slightly better than the overall musical instrument industry.
Lower GMS Per Active Buyer
GMS per active buyer was $121, down by 3.5% year over year, with lower household income buyers underperforming.
Company Guidance
In the Etsy earnings call, guidance for 2025 highlighted several key metrics and strategic pivots aimed at returning the company to growth. For the full year 2024, Etsy reported a consolidated Gross Merchandise Sales (GMS) of $12.6 billion, down 4% year over year, with record revenue of $2.8 billion, a 2% increase. The adjusted EBITDA was $782 million, with margins of 27.8%. The company plans to continue leveraging its differentiation in creative goods, aiming to enhance the Etsy app's conversion rates, currently accounting for over 40% of marketplace GMS. Etsy's strategy includes expanding the use of Large Language Models (LLMs) to improve item quality evaluation and personalization, intending to fuel purchase frequency and drive GMS growth. The company aims for a take rate of approximately 23% in Q1 2025 and consolidated adjusted EBITDA margins of 25-26%, while maintaining marketing spend as a percentage of revenue constant year over year. Furthermore, Etsy anticipates easier comparisons in the second half of 2025, with a balanced focus on near-term GMS initiatives and longer-term strategic investments.Etsy Corporate Events
Business Operations and Strategy
Etsy Approves 2024 Inducement Plan for New Employees
Neutral
Dec 16, 2024
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.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
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.