Goldman Sachs has hit Etsy (ETSY, Financial) with a downgrade to "Sell," marking a turning point for the online marketplace giant as it faces persistent headwinds. The firm slashed its price target from $70 to $45, signaling a potential 9% downside from current levels. Analysts expressed concern over Etsy's extended declines in gross merchandise sales (GMS) and a lack of visibility on a sustainable return to positive growth. Despite efforts to stabilize, Etsy is losing market share in the increasingly competitive global eCommerce landscape.
Eric Sheridan of Goldman Sachs noted that the outlook for Etsy remains bleak, with no clear sign of recovery in consumer purchase intent. Coupled with pressures on profit margins and potential downward revisions to earnings, Etsy's path forward looks challenging. While the stock has already fallen 39% year-to-date, the downgrade reflects deeper concerns that Etsy may continue to underperform. Investors should take note of the significant risks, especially as Goldman sees more favorable upside opportunities in other internet stocks.
At the current trading price, Etsy is still not cheap at all. It is trading at 2.5 times sales and more than 19 times its last-twelve-months EBITDA.
