Etsy shares climbed more than 3% on Tuesday, buoyed by a fresh bullish call from Oppenheimer that highlighted the company's potential to leverage artificial intelligence in virtual shopping. The stock traded at $76.45, recovering nearly 10% from its monthly low, though it still sits about 13% below its yearly peak, keeping it in a technical correction.
Oppenheimer leads the bullish charge
Ananya Chetia, an analyst at Oppenheimer, upgraded Etsy from perform to outperform and set a price target of $90, implying roughly 21% upside from current levels. In her note, Chetia argued that Etsy is well-positioned to benefit from AI applications in e-commerce, particularly in enhancing the shopping experience and personalization.
She joins a growing list of analysts turning positive on the stock. Nikhil Devnani of Bernstein upgraded Etsy from hold to strong buy, while Taylor Conrad of Argus raised his target from $67 to $89. Other firms, including Bank of America, Morgan Stanley, Loop Capital, and Rosenblatt, also maintain bullish stances.
Business fundamentals show mixed signals
Etsy, known for handmade and vintage goods, has faced a slowdown since the pandemic-driven surge. Revenue growth has decelerated, and seller relations have been strained by fee increases. In the second quarter, the platform reported 87 million active buyers, roughly flat year-over-year. New buyers totaled 5 million, up 4.4%, while reactivated buyers rose to 7.1 million. Active sellers edged up to 5.7 million.
To counter sluggish growth, management has focused on profitability. The company recently announced layoffs of 220 employees, about 12% of its workforce, with restructuring costs estimated at $35 million.
Revenue outlook remains pressured
Analysts expect revenue to stay under pressure, especially after the $1.6 billion sale of Depop and Reverb. Consensus estimates project third-quarter revenue to decline 1.45% to $668 million, with full-year revenue falling 1.16% to $2.85 billion.
Technical analysis: key levels to watch
From a chart perspective, Etsy's daily price action has formed a triple-top pattern at $87, with a neckline at $77.70. The stock has slipped below that neckline, which also aligns with the 23.6% Fibonacci retracement. It is now attempting to bounce after reaching the 38.2% Fibonacci level.
The shares remain below the 50-day moving average and the $77.70 resistance. This setup suggests a potential break-and-retest pattern, a common continuation signal. The bearish outlook stays intact as long as the price holds below $77.70.
For context, other market moves include XRP's recent climb and Meta's premarket gains on similar analyst optimism.
This article is for informational purposes only and does not constitute financial advice.
