Etsy cut to Sell: Goldman Sachs sees 9% downside

Investing.com -- Goldman Sachs downgraded Etsy (NASDAQ:ETSY ) to Sell in a note Tuesday, citing persistent challenges in growth and competitiveness.

The investment bank's analysts lowered their price target for the stock from $70 to $45, representing a potential downside of 9% from Etsy's current stock price.

"We downgrade ETSY to Sell with a $45 price target, which implies -9% downside to current trading," Goldman Sachs states.

They explain that the downgrade is driven by three key concerns. First, "GMS declines have persisted longer than we expected, and visibility on a durable return to positive growth remains low."

Goldman's analysis highlights the Street's projection of only 3% year-over-year GMS growth in 2025 as too optimistic.

Second, Goldman predicts Etsy will continue to lose market share in the global eCommerce space. "We expect the Etsy Marketplace to continue to lose market share of overall Global ex-China eCommerce sales," the bank warns, citing muted growth in active buyers and an increasingly competitive industry landscape.

Third, the bank expressed concern over potential downward revisions to Etsy's earnings. "Street Adj. EBITDA estimates could be revised lower if GMS declines continue for longer than expected or if ETSY steps up growth investments," Goldman notes, adding that these risks could erode valuation support.

While the stock has underperformed significantly this year—down 39% year-to-date—Goldman remains cautious, saying, "We still see an unfavorable risk/reward due to the risk of further negative revisions to medium-term consensus estimates."

Goldman also contrasted the projected downside with its more positive outlook for other internet stocks, noting that "the -9% downside to our price target compares to an average +30% upside across our US Internet coverage."

Source: Investing.com