On Thursday, Goldman Sachs updated its assessment of Etsy (NASDAQ:ETSY) shares, increasing the online marketplace's stock price target to $47.00, up from the previous $45.00, while keeping a Sell rating on the stock. The firm's analysis followed Etsy's third-quarter earnings report, which revealed a mix of performance indicators.
Etsy reported a year-over-year decline of 4% in its Gross Merchandise Sales (GMS) for the third quarter, with a sharper 6% drop in its core marketplace GMS. The company's guidance for the fourth quarter suggests a continued decline in GMS, expecting a low-single-digit to mid-single-digit percentage decrease year-over-year.
Despite these trends, Etsy's third-quarter revenue outperformed expectations, achieving a record take rate of 22.7%, buoyed by growth in both marketplace and services revenue.
The company's profitability in the third quarter also exceeded forecasts, bolstered by improved cost control measures. Moreover, Etsy's acquisition, Depop, showed robust operating momentum, with GMS acceleration in the third quarter and projections for over 30% year-over-year growth in the fourth quarter.
Etsy's commitment to shareholder value was also evident through its share repurchase activities during the quarter and the announcement of a new $1 billion share buyback authorization by its board.
Looking ahead, Goldman Sachs anticipates that Etsy's marketplace GMS will remain a critical metric for investors as they monitor the downward trend into the fourth quarter. The potential range of adjusted EBITDA margin outcomes for 2025 is also expected to draw investor attention, considering the current pace of expense growth.
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