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3 Reasons to Avoid ETSY and 1 Stock to Buy Instead

By: StockStory

September 22, 2025 at 00:02 AM EDT

ETSY Cover Image

Over the past six months, Etsy has been a great trade, beating the S&P 500 by 24.3%. Its stock price has climbed to $64.15, representing a healthy 39.9% increase. This run-up might have investors contemplating their next move.

Is there a buying opportunity in Etsy, or does it present a risk to your portfolio? Dive into our full research report to see our analyst team’s opinion, it’s free.

Why Is Etsy Not Exciting?

We’re glad investors have benefited from the price increase, but we're cautious about Etsy. Here are three reasons you should be careful with ETSY and a stock we'd rather own.

1. Active Buyers Hit a Plateau

As an online marketplace, Etsy generates revenue growth by increasing both the number of users on its platform and the average order size in dollars.

Etsy struggled with new customer acquisition over the last two years as its active buyers were flat at 93.33 million. This performance isn't ideal because internet usage is secular, meaning there are typically unaddressed market opportunities. If Etsy wants to accelerate growth, it likely needs to enhance the appeal of its current offerings or innovate with new products. Etsy Active Buyers

2. Projected Revenue Growth Shows Limited Upside

Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.

Over the next 12 months, sell-side analysts expect Etsy’s revenue to stall, a deceleration versus This projection doesn't excite us and implies its products and services will face some demand challenges.

3. EPS Growth Has Stalled

We track the change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.

Etsy’s flat EPS over the last three years was below its 5.5% annualized revenue growth. This tells us the company became less profitable on a per-share basis as it expanded.

Final Judgment

Etsy’s business quality ultimately falls short of our standards. With its shares topping the market in recent months, the stock trades at 10.8× forward EV/EBITDA (or $64.15 per share). This valuation is reasonable, but the company’s shakier fundamentals present too much downside risk. We're pretty confident there are more exciting stocks to buy at the moment. Let us point you toward one of our all-time favorite software stocks.

Stocks We Would Buy Instead of Etsy

Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.

Take advantage of the rebound by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.

StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.

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