Loop Capital analyst explains why she downgraded Etsy stock to ‘hold’


Etsy Inc (NASDAQ: ETSY) stock has cut in half over the past four months and things still seem to be getting worse, says Loop Capital’s Laura Champine.

Champine assigned a $140 PT to Etsy stock

Champine downgraded Etsy to “hold” this morning and lowered her price target to $140; pretty much where the stock is trading at present. On CNBC’s “TechCheck”, she said:

Things have gotten worse since Etsy’s earnings on the inflation and geopolitical front. Home-related buys are big ticket buys. So, the shift to events and away from home means lower revenue per transaction, which potentially means lower fees for Etsy.

Champine cited unfavourable macroeconomic environment as she lowered her estimates for full-year sales in 2022 and 2023.

Inflation in digital advertising is to blame

According to the Loop Capital analyst, her dovish outlook on the eCommerce company is primarily related to significant inflation in digital advertising. She noted:

Our call isn’t that they’re making mistakes. It’s that the environment is not great for their business in general. We see cost to acquire customers is moving higher. The digital advertising costs are up 20% to 40% per impression.

Still, Etsy, in February, reported its financial results for the fourth quarter that topped Wall Street expectations. The stock currently trades at a PE multiple of 42.86.

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