Etsy Earnings: Poor Quarterly Results Drive Valuation Haircut, Long-Term Prospects Remain Alluring

Wide-moat Etsy has endured a tough stretch since its pandemic surge, and the closing quarter of 2024 was rough. All else equal, poor results and guidance would have driven a low-single-digit haircut to our $100 fair value estimate. But taken in tandem with a sourer macroeconomic view since our most recent update—which now contemplates a trough in US real GDP growth in the first quarter of 2026, roughly two quarters later than previously—we plan to lower our fair value estimate for Etsy by a high-single-digit percentage after digesting results. The market responded similarly, with shares trading down 10% during Feb. 19 trading.