Key insights
- An analyst expresses a bearish outlook on Etsy (ETSY), citing its high P/E ratio relative to peers, declining sales, and high costs for both buyers and sellers. They believe Etsy is vulnerable in a weakening economy with reduced discretionary spending and increasing AI competition. The analyst has initiated a short position with a price target of $35.
ETSY is a strong short. This is a company trading with a P/E higher than all relevant peers and a company with declining sales. Sure they sold Depop, at a loss, but infused cash to lower debt, but at what expense?
The expense of growth.
ETSY operates a high cost marketplace, high fees on sellers, high shipping costs and more on buyers, and a premium on the goods that are ‘supposedly’ craft.
We are entering the toughest economy in a decade and since COVID, and discretionary spending is way down. ETSY is not a place to take a long term bet. AI continues to replace (not add to) these types of businesses. We have loaded up on puts.
Our price target is 35.