This Under‑the‑Radar E-Commerce Stock Is Down from Its Highs -- and Might Be the Biggest Bargain in The Market Right Now.
Key Points
Etsy is right-sizing and stabilizing its core business.
It looks undervalued relative to other e-commerce stocks.
- 10 stocks we like better than Etsy ›
Etsy (NYSE: ETSY), the online artisan marketplace for customized and handcrafted goods, closed at a record high of $296.91 per share on Nov. 24, 2021. That marked a 1,756% gain from its IPO price of $16 on April 16, 2015. At the time, investors were impressed by its accelerating growth during the pandemic and its resilience against Amazon (NASDAQ: AMZN).
But today, Etsy's stock trades at about $64. It lost its luster as its growth slowed down and it "di-worsified" its business with messy acquisitions. However, it's starting to look like a bargain relative to its growth potential -- and it might be worth buying as a turnaround play.
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Image source: Getty Images.
What happened to Etsy over the past five years?
Etsy's growth can be gauged by its number of active sellers, active buyers, and gross merchandise sales (GMS)-- or the total value of all goods sold across its platform. All three metrics soared in 2020 and 2021, but that growth spurt ended in 2023 and 2024.
|
Metric |
2020 |
2021 |
2023 |
2024 |
2025 |
|---|---|---|---|---|---|
|
Active Sellers Growth (YOY) |
61.7% |
72.3% |
21% |
(10%) |
(1.5%) |
|
Active Buyers Growth (YOY) |
76.7% |
17.6% |
1.5% |
(1.1%) |
(3.4%) |
|
GMS Growth (YOY) |
106.7% |
31.2% |
(1.2%) |
(4.4%) |
0.1% |
Data source: Etsy. YOY = Year-over-year.
Etsy grew rapidly during the pandemic as more people stayed at home and purchased more products online. Its sellers also scrambled to produce more handmade masks.
Etsy also expanded its ecosystem with several big acquisitions -- including the musical instruments marketplace Reverb, the U.K. fashion resale marketplace Depop, and the Brazilian artisan marketplace Elo7 -- from 2019 to 2021. Those acquisitions initially boosted its revenues, but they subsequently compressed its margins.
In 2023 and 2024, Etsy struggled as the pandemic-driven tailwinds dissipated, the macro headwinds throttled consumer spending, and it faced tougher competition from Amazon, PDD's Temu, Shein, and other discount e-commerce marketplaces.
To offset that pressure, Etsy sold Reverb, Depop, and Elo7 over the past three years. It streamlined its business, expanded its integrated advertising business, and tightened its spending to improve its take rates. In 2025, Etsy's GMS finally grew slightly, while its growth in active sellers and buyers gradually stabilized on a sequential basis.
Why could Etsy be a bargain?
Etsy's high-growth days are over. But from 2025 to 2028, analysts expect its revenue and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to grow at CAGRs of 1% and 5%, respectively, as it right-sizes and strengthens its core business.
With an enterprise value of $7.8 billion, Etsy trades at just 9 times next year's adjusted EBITDA. Therefore, any positive news or stronger-than-expected growth could drive Etsy's stock higher.
Should you buy stock in Etsy right now?
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Leo Sun has positions in Amazon. The Motley Fool has positions in and recommends Amazon and Etsy. The Motley Fool has a disclosure policy.
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