Etsy user growth shows potential for above-consensus Q2 revenue – Truist

After a string of losses, shares of Etsy (NASDAQ:ETSY) closed higher on Tuesday, as an upbeat outlook on the company’s user metrics and insulation from import tariffs gave the stock a boost.

For the first time in 22 months, Etsy’s (NASDAQ:ETSY) monthly average users (“MAU”) growth “eclipsed double-digits in May, which we attribute to the company’s efforts to re-engage in short-term [gross merchandise sales] conversion activity along with an increase in marketing efficiency,” Truist analyst Youssef Squali said in his research note to investors.

Squali expects the company’s gross merchandise sales (“GMS”) growth and margins to improve in the latter part of this year, largely due to management’s refocus on investing in growth.

Citing Truist card data, Etsy’s (NASDAQ:ETSY) marketplace revenue is tracking ahead of consensus estimates, leading Squali to raise his Q2 revenue estimate to $463M from $455M.

And although tariffs could be a challenge for Etsy (ETSY), Squali sees the company “well-insulated” given its diversified seller base. In 2024, 50% of Etsy (ETSY) sales originated domestically, and no single country made up more than 4% of total sales. Meanwhile, the elimination of the de minimis exemption is “manageable” versus competitors like SHEIN and Temu (PDD).

Truist maintains its Buy rating for Etsy (ETSY) and lifted its target price by 9% to $60, representing an 11% upside to Tuesday’s closing price.