Etsy Shares Drop As Needham Downgrades Stock Citing Near-Term Risks

  • Needham analyst Anna Andreeva downgraded Etsy, Inc ETSY from Buy to Hold.
  • While shares have lagged and some near-term volatility is arguably in the stock, she views the discretionary nature of the ETSY model as increasingly at risk in the near term. 
  • While visibility is low, she thought that consensus GMS and Sales estimates could be optimistic for 2H22 and especially for '23.
  • She noted that elevated inventories across retail could make Etsy's value proposition less compelling.
  • Longer-term, she still views ETSY as unique with a significant opportunity to drive frequency for buyers and sellers. 
  • Andreeva cut her '22/'23 GMS estimates below consensus; with no additional tax attributes remaining, the effective tax rate could swing to 15%-17% in '23.
  • She estimates a $0.35 headwind to '23 EPS. 
  • Price Action: ETSY shares traded lower by 3.49% at $80.70 in the premarket on the last check Monday.
  • Photo via Wikimedia Commons

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