
Etsy, Inc.

ETSY (Etsy, Inc.) trades at 2.0x EV/Revenue — attractively valued for a handmade/vintage marketplace company with best-in-class gross margins (72%) and mature growth profile (-5% YoY). The business is approaching profitability at 12% EBIT margins. Forward PE of 17x.
Loss aversion: investors feel losses 2.5x more than equivalent gains. This causes selling winners too early and holding losers too long.
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Etsy operates a global marketplace connecting buyers with sellers of unique, handmade, vintage, and creative goods. The company monetizes through transaction fees, payment processing, advertising services, and seller tools, primarily serving consumers seeking personalized and distinctive items that can't be found in traditional retail. With 86.5 million active buyers and a mobile app driving 46% of gross merchandise sales, Etsy facilitates billions in commerce between creative entrepreneurs and their customers.
Etsy is emerging from a multi-year decline with Q4 marking the first positive GMS growth since 2023. Revenue has stabilized around $2.8 billion with management targeting slight growth in 2026 after improving from -6% GMS growth in 2024 to -4% in 2025. The growth is being driven by mobile app engagement (6.6% GMS growth acceleration), improved buyer acquisition metrics (17.2 million gross additions), and emerging agentic commerce initiatives growing 15x year-over-year.
Etsy demonstrates strong unit economics with 71.6% gross margins and marketplace-level adjusted EBITDA margins slightly above 30%. The company generated $735 million in adjusted EBITDA in 2025, converting an impressive 87% to free cash flow. With marketing showing leverage and take rates expanding, Etsy is well-positioned for margin expansion as growth stabilizes, particularly after divesting lower-margin businesses like Depop.
Etsy maintains a differentiated position in the e-commerce landscape by focusing exclusively on unique, handmade, and vintage items that create an emotional connection between buyers and sellers. Unlike Amazon or eBay, Etsy's human-centered marketplace emphasizes creativity and personalization, creating natural barriers to commoditization. The company's investments in machine learning for buyer-item matching and agentic commerce partnerships with Microsoft and Google reinforce its positioning as the go-to platform for distinctive goods.
Q4 2025 marked a significant inflection point with the first positive marketplace GMS growth in over a year and a massive revenue beat of 37.8%. The announced $1.2 billion Depop sale to eBay demonstrates management's commitment to focusing resources on the core marketplace opportunity. Mobile app momentum accelerated with 6.6% GMS growth, while buyer acquisition metrics showed meaningful improvement with 17.2 million gross additions up 2.7% year-over-year.
Analysts appear cautiously optimistic about Etsy's turnaround story, with consensus estimates showing modest revenue growth resuming in 2027 ($2.848B vs $2.745B in 2026). The forward P/E multiple suggests reasonable valuation expectations, while EPS growth from $3.06 to $3.50 between 2026-2027 indicates confidence in margin expansion. The Depop sale likely addresses previous concerns about business focus and capital allocation.
Etsy has reached an inflection point, returning to marketplace growth after two years of decline while maintaining exceptional profitability and preparing to deploy $1.2 billion in cash from the Depop sale toward its core business.
| '25E | '26E | '27E | '28E | |
|---|---|---|---|---|
| Revenue | $2.9B | $2.7B | $2.8B | $3.0B |
| Growth | — | (5%) | +4% | +4% |
| EBITDA | — | $537M | $564M | $595M |
| Growth | — | +5% | +6% | |
| FCF | $678M | $506M | $543M | $585M |
| Margin | 24% | 18% |
Etsy, Inc. (ETSY) Presents at Morgan Stanley Technology, Media & Telecom Conference 2026 Transcript
eBay layoffs today: 6% of jobs cut days after buying Depop from Etsy
Etsy to Participate in Upcoming Investor Conference
Etsy Momentum Drops Following Mixed Q4, Despite Fashion Marketplace Depop Sale To eBay
Etsy: Green Shoots Are Materializing
| 19% |
| 20% |
| EPS (PF) | $1.39 | $3.06 | $3.50 | $4.11 |
| Growth | — | +120% | +14% | +17% |
| PF Op Inc | — | $643M | $676M | $715M |