Barclays has upgraded Etsy's stock to Overweight from Equal Weight and raised its price target to $72 from $62, citing what it describes as two pivotal developments reshaping the company's outlook: a pending sale of Depop and indications that the core marketplace is regaining footing.
The bank reported that Etsy's fourth-quarter gross merchandise sales (GMS) totaled $3.593 billion, representing a 1% increase when excluding foreign exchange impacts and Reverb. On the same basis, revenue rose 7% to $882 million. While both figures were slightly below consensus, adjusted EBITDA exceeded expectations by roughly 3%, or about $6 million.
Barclays highlighted an improvement in core Etsy GMS trends: declines narrowed to 1% year on year in the fourth quarter when excluding foreign exchange, and reported GMS growth turned positive for the first time in more than two years. Company management has committed to delivering positive year-on-year growth in every quarter of 2026.
Buyer metrics showed tentative improvement. Gross buyer additions increased 3% to 17.2 million in the quarter - the first rise since 2023 - supported by a 6% gain in reactivated buyers. New buyer activations fell 1%, an outcome Barclays notes as an improvement relative to prior periods that featured double-digit declines.
Implications of the Depop sale
The brokerage views the expected sale of Depop as a positive development. Barclays said the divestiture would refocus management attention on Etsy's core marketplace and improve reported profitability metrics because Depop was a loss-making unit. The bank estimates the transaction would yield about $1.2 billion in cash proceeds, which could enable more aggressive share buybacks once the deal is completed.
On forward projections, Barclays now anticipates low single-digit reported growth for Etsy's core platform in 2026, with modest acceleration in 2027 and 2028. The firm models an EBITDA margin of just over 28% for 2026, and notes that the stock is trading at roughly 8 times Barclays' 2027 EBITDA estimate - a valuation the bank considers not stretched.
Outlook and investor considerations
Barclays argues that a sustained return to positive GMS growth and a narrowing of the gap between Etsy's growth and broader U.S. e-commerce expansion could draw renewed investor interest. Nonetheless, the bank flagged several headwinds that could limit upside: ongoing competition in the space, macroeconomic uncertainty, and declines in repeat and habitual buyers.
This combination of improving operational metrics, potential balance-sheet reinforcement from the Depop sale, and a valuation the bank views as reasonable underpins Barclays' decision to upgrade the shares.
Key takeaways
- Barclays upgraded Etsy to Overweight and raised its price target to $72 from $62.
- Q4 GMS were $3.593 billion, up 1% excluding FX and Reverb; revenue rose 7% to $882 million on the same basis; adjusted EBITDA beat by about $6 million.
- The anticipated Depop sale could deliver about $1.2 billion in cash and improve EBITDA after removing a loss-making business.
Risks noted by Barclays
- Intensifying competition in the e-commerce and online marketplace sectors could pressure growth and margins.
- Macroeconomic uncertainty may affect buyer behavior and overall marketplace demand.
- Declines in repeat and habitual buyer engagement could impede recovery in core GMS.