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. ETSY, lowering 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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