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On Thursday, Goldman Sachs analyst Eric Sheridan adjusted the price target on Etsy (NASDAQ:ETSY) shares, reducing it to $31.00 from the previous $35.00, while maintaining a Sell rating on the company. Currently trading at $43.48, Etsy’s stock has declined nearly 18% year-to-date, according to InvestingPro data. Sheridan’s analysis followed the release of Etsy’s first-quarter earnings report for 2025, which revealed several key points about the company’s performance and outlook. The company’s current market capitalization stands at $4.5 billion.
Etsy reported that its Gross Merchandise Sales (GMS) for the first quarter met expectations, with a slightly better revenue take rate and adjusted EBITDA margin than initially guided. The company maintains impressive gross profit margins of 72.3% and a healthy current ratio of 2.14, as reported by InvestingPro. For the second quarter, the company forecasted a GMS decline similar to the first quarter, with potential for slight improvement. Management also expressed optimism about improving trends throughout the year, though they acknowledged the possibility that macroeconomic uncertainty could impact this trajectory.
The company is increasing its investment in paid social marketing, which has led to higher returns and significant growth in paid social Etsy Marketplace GMS. Etsy also noted positive results from a greater emphasis on personalized emails and push notifications. However, year-over-year gross margins have been compressed due to cost headwinds associated with cloud-related hosting, bandwidth demands (including increased AI and machine learning computations), and expenses from the Etsy Insider loyalty program.
Sheridan anticipates that investor debates over the next three to six months will focus on how changes in consumer behavior could affect GMS. In his long-term view, he remains cautious, citing the challenges Etsy faces in the eCommerce sector. The platform’s focus on discretionary purchases and the competitive pressure from platforms prioritizing price and delivery speed are seen as potential obstacles for Etsy. Following these insights, the decision was made to lower the 12-month price target for Etsy’s stock. Notably, analyst targets for the stock range widely from $31 to $92.45, reflecting mixed sentiment about the company’s prospects. For deeper insights into Etsy’s valuation and growth potential, including exclusive ProTips and comprehensive financial analysis, investors can access the full research report on InvestingPro, which covers over 1,400 US stocks with detailed metrics and expert analysis.
In other recent news, Etsy Inc . reported its Q1 2025 financial results, revealing a significant miss in earnings per share (EPS) compared to analyst forecasts. The company posted an EPS of -$0.49, falling short of the expected $0.47, despite revenue slightly exceeding expectations at $651.2 million. This earnings miss has raised concerns among investors, overshadowing the 1% year-over-year revenue increase. Additionally, Etsy has divested its Reverb marketplace for $105 million, a move that aligns with its strategic focus on core business areas. The company also introduced new seller fees and reduced brand marketing spend as part of its operational adjustments. Analysts from Wolfe Research and JPMorgan have shown interest in Etsy’s marketing strategies, particularly its increased focus on social media channels. Looking forward, Etsy expects its Q2 consolidated Gross Merchandise Sales (GMS) to decline at a similar or slightly better rate than Q1, with a projected adjusted EBITDA margin of approximately 25%. The company continues to navigate macroeconomic challenges impacting consumer discretionary spending.
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