Expect EBITDA Margin Compression At Etsy As Investments Elevate Buyer Stickiness, Analyst Warns

  • Needham analyst Anna Andreeva reiterated a Buy rating on the shares of Etsy, Inc. ETSYlowering the price target to $130 from $160.
  • The analyst believes a key investor concern on Etsy is the decline of Habitual buyers.
  • The company has seen 'very few' habitual buyers who are churning entirely, i.e., moving into the Repeat buyer bucket.
  • Thus, while Habitual buyers are expected to continue to decline in the near-term given COVID attrition and the TTM metric, Repeat buyer numbers are holding steady at 40% of the base.
  • The analyst believes that Etsy is still in the "early innings" of various product and marketing initiatives to engage and retain the record-high number of buyers and sellers added to the platform in the last 18 months, the analyst notes.
  • Given the above concerns, the analyst thinks not much near-term growth will be priced into Etsy's shares.
  • In addition, the analyst cautions that Etsy is likely to see EBITDA margin compression as it invests more in elevating buyer stickiness.
  • Price Action: ETSY shares are trading higher by 5.10% to $86.17 on the last check Friday.
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