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Etsy - AI Stock Analysis

Analysis generated January 7, 2025

Etsy, Inc. (NASDAQ: ETSY) is a leading global online marketplace for unique and creative goods, connecting millions of buyers and sellers around the world. The platform primarily features handcrafted items, vintage goods, and craft supplies. Founded in 2005, Etsy has since grown into a prominent player in the e-commerce space, distinguished by its commitment to promoting small businesses and individual entrepreneurs.

Fundamental Analysis

For the last quarter, Etsy reported revenue of $662 million. This marks a 2.25% increase compared to the previous quarter and a 4.10% increase compared to the same quarter last year. This indicates a steady growth trajectory, which is a positive indicator for investors.

The net income for the last quarter was $57 million, showing an 8.23% increase compared to the previous quarter. While the quarter-over-quarter figures are encouraging, it’s noteworthy that net income decreased by 34.70% compared to the same quarter last year. This year-over-year decline could be a red flag and warrants closer examination.

The EBITDA for the last quarter was $115 million, with a 17.79% increase compared to the previous quarter and a 3.46% increase year-over-year. This indicates improving profitability and operational efficiency, which could bode well for future financial performance.

Currently, Etsy has a Price-to-Earnings (P/E) ratio of 27.5. This high P/E ratio may suggest that the stock is potentially overvalued, reflecting a bearish outlook. Additionally, the recent insider selling could also be a bearish signal, indicating that those closest to the company may have concerns about its near-term prospects.

Technical Analysis

Today's stock price for Etsy is $54.01. This represents a 5.74% decrease compared to a month ago, which might raise concerns about short-term price movement. Even more alarming is the 30.54% decrease compared to the stock price a year ago, which suggests issues that could affect the stock in the longer term.

Despite these declines, the trend appears bullish, as indicated by the Simple Moving Average (SMA10) of 53.78, which is slightly higher than the previous SMA10 of 53.65. This may suggest a potential upward trend in price movement. Additionally, the Relative Strength Index (RSI) of 23 indicates that the stock is in oversold territory, signaling a potential bullish condition.

Alternative Data Analysis

Examining job postings and employee sentiment, Etsy has 83 open positions, up by 32% in the last couple of months. This increase indicates that the company is looking to grow, which can generally be seen as a healthy sign. The business outlook among employees is neutral, implying neither excessive optimism nor pessimism.

Regarding customer acquisition, Etsy has an estimated 456 million visitors to its webpage, a 10% increase in the last couple of months. This bullish trend suggests growing customer interest. Moreover, Etsy sees around 40,000 mobile app downloads every day, which has increased by 50% over the past couple of months, further indicating rising customer engagement.

For customer engagement, Etsy has 3.3 million followers on Instagram with no meaningful changes recently. On Twitter, Etsy has 2.3 million followers, with a slight decline of 1% over the past few months, possibly indicating a small loss in interest. According to AltIndex’s AI score, which incorporates fundamental, technical, and alternative data, Etsy’s score is 53, signaling a hold.

Conclusion and Recommendation

Etsy presents a mixed bag of indicators. On the positive side, the company has shown revenue growth both quarter-over-quarter and year-over-year, EBITDA figures are improving, and key indicators from alternative data sources suggest growing customer acquisition and engagement. On the downside, the significant decrease in net income year-over-year and high P/E ratio raise some concerns. Additionally, the insider selling and declining stock price over the last year are critical negative signals.

Considering all these factors, a balanced approach would be to hold onto Etsy stock rather than taking a more aggressive stance of either buying or selling. The positive indicators in customer acquisition and alternative data provide some optimism, while the concerns around net income and valuation suggest a cautious approach is more prudent.

Disclaimer: This AI stock analysis, generated by an experimental AI tool, is for informational purposes only and not financial advice. Information is based on publicly available data and may not always be accurate or current.