Why Etsy Analyst Expects Stock To Continue Its Steep Downtrend

Shares of Etsy Inc ETSY have lost around 38% year to date, with the company facing intensifying competition.

According to Goldman Sachs, the current Street estimates for Etsy are at risk, given the low visibility into gross merchandise sales, the potential for persistent share losses, and the risk of margin compression in 2025.

Analyst Eric Sheridan downgraded Etsy’s rating from Neutral to Sell and slashed the price target from $70 to $45.

The Etsy Thesis: The company's gross merchandise sales have been declining for longer than expected and there is limited visibility into a "durable return to positive growth," Sheridan said in the downgrade note.

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"We expect the Etsy Marketplace to continue to lose market share of overall Global ex-China eCommerce sales in the years ahead, based on a combination of our bottom-up fundamental analysis (which points to muted active buyer growth) and our top-down industry work on eCommerce (which points to a maturing and increasingly competitive backdrop)," the analyst wrote.

The Street expectations reflect a meaningful reacceleration in gross merchandise volume "despite low visibility on the catalyst," Sheridan said. Although the stock has tanked year to date, the risk/reward remains "unfavorable" owing to the possibility of "further negative revisions to medium-term consensus estimates," he added.

ETSY Price Action: Shares of Etsy were up 2.6% to $50.94 at the time of publication on Tuesday.

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