Etsy Loses Its Meme Stock Shine – Is It Still a Buy?

Core Viewpoint - Etsy Inc. has seen its stock decline approximately 7% since the earnings report on February 19, primarily due to concerns over slowing growth despite year-over-year revenue and earnings increases, and a low forward price-to-earnings (P/E) ratio of around 8x [1] Financial Performance - Etsy's quarterly revenue has surpassed $850 million, indicating its growth beyond a niche market [4] - The company's revenue growth over the last 12 months is only 2.18%, significantly lower than its compound annual growth rate (CAGR) of 27.9% [4] - Gross merchandise sales (GMS) have decreased by 4.4%, marking the lowest quarterly revenue growth since the company went public in 2014 [7] Market Trends - The number of active sellers on Etsy surged by approximately 75% from 2020 to 2021, reaching 7.5 million, but has since remained flat and decreased by 8.5% year-over-year [6] - There have been four consecutive years of declining GMS, suggesting a potential decline in the platform's value proposition [8] Investment Outlook - Analysts have a consensus Hold rating for Etsy, with a 12-month price target of$ 58.78, indicating a potential upside of 10.64% [9] - The stock is viewed as more suitable for short-term trading rather than a long-term investment, with the price consolidating and potential for a move higher if trading volume increases [10] - Despite the potential for long-term growth in the e-commerce space, Etsy is struggling to shed its image as a niche site [9]