Key Moments:
- Barclays upgraded Etsy to Overweight and lifted its price target to $72 from $62, pointing to a strategic shift and improving marketplace trends.
- Core Etsy gross merchandise sales decline narrowed to 1% year on year in the fourth quarter excluding FX, with reported growth turning positive for the first time in more than two years.
- The anticipated Depop sale is expected to add about $1.2 billion in cash and enhance EBITDA, while helping sharpen focus on Etsy’s core platform.
Barclays Upgrade and Valuation View
Barclays has raised its rating on Etsy (NASDAQ:ETSY) to Overweight from Equal Weight and increased its price target to $72 from $62. The firm highlighted what it regards as two significant turning points in Etsy’s investment narrative: the planned divestiture of Depop and evidence that the company’s main marketplace performance is stabilizing.
Based on its analysis, Barclays stated that Etsy is trading at about 8x its 2027 EBITDA estimate, and it does not see this valuation as demanding. The firm believes a sustained recovery in gross merchandise sales (GMS) and a reduction in the performance gap versus the broader U.S. e-commerce market could help rekindle investor interest in the stock.
Fourth Quarter Performance Metrics
For the fourth quarter, Barclays noted that Etsy generated gross merchandise sales of $3.593 billion, representing a 1% increase when excluding foreign exchange effects and Reverb. Revenue on the same basis rose 7% to $882 million.
While both GMS and revenue came in slightly below consensus expectations, adjusted EBITDA exceeded estimates by approximately 3%, or about $6 million.
| Metric (Q4) | Result | Basis / Commentary |
|---|---|---|
| Gross Merchandise Sales (GMS) | $3.593 billion | Up 1% excluding FX and Reverb |
| Revenue | $882 million | Up 7% on the same basis |
| Adjusted EBITDA | Beat by about $6 million | Approximately 3% ahead of consensus |
Core Marketplace Trends and Buyer Dynamics
Barclays observed that core Etsy GMS contraction improved meaningfully in the fourth quarter. Excluding foreign exchange impacts, the decline narrowed to 1% year on year, and reported GMS growth turned positive for the first time in more than two years.
Management has guided for positive year on year growth in every quarter of 2026. On the buyer side, gross buyer additions increased 3% to 17.2 million, marking the first rise since 2023. This was supported by a 6% increase in reactivated buyers. New buyer activations slipped 1%, but Barclays described this as an improvement relative to prior periods characterized by double digit declines.
| Buyer Metrics | Change / Level | Details |
|---|---|---|
| Gross buyer additions | Up 3% | Reached 17.2 million; first increase since 2023 |
| Reactivated buyers | Up 6% | Supported overall additions |
| New buyer activations | Down 1% | Improved from earlier double digit declines |
Depop Sale and Capital Allocation Implications
Barclays expects the proposed sale of Depop to be a constructive move for Etsy. The firm characterized the Depop business as loss making and argued that its divestiture should help refocus investors on the core marketplace while boosting EBITDA forecasts.
Once the transaction is completed, Barclays estimates that Etsy would receive about $1.2 billion in cash. The bank indicated that this additional liquidity could be used to accelerate share repurchase activity.
Outlook, Margin Expectations, and Risks
Looking ahead, Barclays projects low single digit reported growth for Etsy’s core platform in 2026, with a modest acceleration anticipated in 2027 and 2028. The firm is modeling an EBITDA margin slightly above 28% in 2026.
Despite its more constructive stance, Barclays also underscored several ongoing risks. These include competitive pressures, macroeconomic uncertainty, and continued declines in repeat and habitual buyers. The firm suggested that a sustained return to positive GMS growth and a narrowing of Etsy’s underperformance relative to U.S. e-commerce more broadly would be key to attracting investors back to the name.
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