Etsy: From Value Trap To GARP Investment (Rating Upgrade)

Etsy, Inc. reported a good double beat in Q2, but the stock reacted negatively. GMS on Etsy has inflected positively, currently hidden by the divestments of Reverb and Depop. ETSY's outlook is now good, driven by GMS growth, a stable take rate, and cost efficiencies. Improved earnings momentum has made ETSY stock undervalued. I estimate 50% upside to $118.5.

Etsy, Inc. ( ETSY ) reported the company’s Q2 results on Aug. 5. The online marketplace’s momentum has improved significantly, currently clouded by revenue headwinds from the divestments of Reverb and Depop. The market reacted negatively to Etsy’s results despite This article was written by Caffital Research I am an avid investor with a major focus on small cap companies with experience in investing in US, Canadian, and European markets. My investment philosophy to generating great returns on the stock market revolves around identifying mispriced securities by understanding the drivers behind a company's financials, and ultimately, most often revealed by a DCF model valuation. This methodology doesn't limit an investor into rigid traditional value, dividend, or growth investing, but rather accounts for all of a stock's prospects to determine the risk-to-reward.