$28.81
$107.63
bear $28.81
base $81.93
bull $107.63
margin of safety $50.00
market price* $85.14
What the business is. Etsy runs an online marketplace where about 5.6 million active sellers sell to about 86.5 million active buyers (end of 2025). The categories Etsy names include home and garden, beauty and personal care, toys and games, pet care, craft supplies, paper and party, and art and collectibles. Etsy earns transaction fees, payment-processing fees, advertising sold to its sellers, and shipping-label fees. In 2025 Etsy marketplace buyers spent $10.46 billion (gross merchandise sales). That figure has fallen three years running, from $11.6 billion in 2023 and $10.9 billion in 2024. Revenue still grew, because Etsy has taken a larger share of each sale: services revenue rose 11.3% in 2025, led by a $62.2 million increase in advertising revenue as the average price per click went up. Etsy has also sold off the businesses it bought. Elo7 went in 2023, Reverb on June 2, 2025, and Depop, the fashion-resale app, was sold to eBay for about $1.4 billion in cash on July 30, 2026. What remains is the core Etsy marketplace. How we measure earnings. We use owner earnings: operating cash flow with working-capital swings removed, less stock-based compensation, which we treat as a real cost (about $245-285 million a year since 2023), less the capital spending needed to keep the business running. Non-cash goodwill write-offs are added back: $1,045 million for Depop and Elo7 in 2022, and $101.7 million for Reverb in 2025. They do not affect the level of cash earnings. They do show that Etsy has a poor record with acquisitions. In 2021 it spent $1.70 billion buying Depop and Elo7. Those two and Reverb, bought in 2019, have all since been written down and sold. On this basis consolidated owner earnings were $388 million (2022), $410 million (2023), $348 million (2024) and $397 million (2025), or $2.74, $2.93, $2.64 and $3.20 per diluted share. We leave out 2020-2021 because those were pandemic-boom years with a much lower stock-compensation cost. The 2022-2025 median is about $393 million. From that we remove roughly $17 million of after-tax interest income on cash, because we treat the cash as set against the convertible debt. We add back about $35 million for Depop's losses, which leave with the sale: in the first half of 2025 Depop lost $33.8 million after tax and used $11.5 million of operating cash. That gives a starting level of about $410 million for the Etsy marketplace alone, or about $4.35 per share on today's share count. The filings do not break out Depop's full-year 2025 cash flow, so that adjustment is an estimate. Shares and debt. Buybacks cut shares outstanding to 91.8 million by July 31, 2026, from about 127 million on average in 2021. Etsy owes $3.0 billion of low-interest convertible notes: $650 million due October 2026, $650 million due September 2027, $1.0 billion due June 2028 and $700 million due June 2030. Cash and investments at June 30, 2026 were about $1.28 billion, and the Depop proceeds brought that to roughly $2.7 billion. Because cash and debt roughly offset each other, we treat the notes as debt covered by cash, not as future shares. We value on about 94.2 million shares, which is shares outstanding plus employee equity awards. If every note instead converted into stock, the values below would be about a fifth lower. All cash flows are discounted at 6%. Base case, $81.93 per share. Profits from the continuing Etsy business are clearly improving. In the first half of 2026 continuing revenue rose 4.7% to $1,299.6 million, second-quarter revenue rose 6.2%, and marketplace sales returned to slight growth in the fourth quarter of 2025. Owner earnings grew 14% in 2025. We assume slower growth than that: 8% in the first year, 6% and 5% in the next two as the recent momentum settles, then 3% a year through year 10, supported by Etsy's record of growing revenue every year from 2016 through 2025, including the recent years when sales volume fell, through higher fees and advertising. That takes owner earnings from about $443 million to about $606 million. After year 10 we hold earnings flat for 20 more years and then stop. The reason earnings continue at all is the marketplace itself: the 86.5 million buyers and 5.6 million sellers who find each other there. We assume no growth in that period because sales volume has fallen recently. Bear case, $28.81 per share. The 2023-2025 pattern resumes: marketplace sales and active buyers keep falling (active buyers fell 3.4% in 2025), and higher fees no longer make up the difference. Owner earnings fall 4% a year for 10 years. Cross-border selling into the US gets harder. The US suspended the duty-free de minimis exemption on August 29, 2025, which Etsy says has already hit some orders, and the exemption ends for good in July 2027. About half of 2025 revenue came from sellers billed outside the US, and 74% of marketplace sales ship to US buyers. Management has said the Depop proceeds will go toward buybacks. In this case they do, and about $1 billion of maturing notes is refinanced at around 6%, costing roughly $47 million a year after tax. Etsy already has a stockholders' deficit of $1.4 billion. After year 10 the business fades to nothing over 15 years. Bull case, $107.63 per share. The 2026 recovery holds. First-half 2026 operating income from continuing businesses was $245.1 million, compared with $90.2 million a year earlier (that earlier figure was cut by the $101.7 million Reverb write-off). Owner earnings grow 12%, 12% and 10% in the first three years as sales volume rises and ads and payments keep lifting fees. Growth then runs at 6% through year 10, reaching about $851 million, and is held flat for 20 years after that. This case needs growing buyer numbers, not just higher fees. What could make this wrong. The base case depends on marketplace sales holding steady or growing. The 2026 improvement is two quarters old. Buyer numbers are still falling, and some of the revenue growth comes from charging sellers more, which cannot continue indefinitely. On the other side, if Etsy spends its cash buying back stock below what the business is worth, per-share value rises. If it buys above that value, or keeps making acquisitions it later writes down, per-share value falls. Margin-of-safety price. The margin-of-safety price of $50 is about 39% below the base case. Etsy is a consumer-discretionary marketplace whose sales volume has fallen for three years, it is financed with convertible notes, and its acquisitions have lost money, so the bear case sits far below the base case. The price assumes a three-to-four-year holding period; from $50 to our base value over that period, allowing for the growth in value the base case assumes, the base case implies roughly 20% a year.