On September 15, Oppenheimer upgraded Etsy, Inc. (NYSE:ETSY) from Perform to Outperform and set a price target of $90. The research firm pointed to artificial intelligence search benefits, product improvements, and app engagement.
Oppenheimer’s analysis of SimilarWeb website traffic suggests that non-app buyers could be flat year-over-year in Q3, compared with a 3% decline in Q2. The firm believes this suggests that Etsy, Inc. could achieve the high end of its gross merchandise sales (GMS) guidance.
The firm forecasts second-half non-app GMS growth at the same level as the second quarter, while taking a conservative view on app GMS and assuming no improvement on a two-year basis despite clear product improvements.
According to Oppenheimer, a survey of 2,500 US consumers also pointed to improving product performance. The firm noted that the company’s product improvements are gaining traction and it also continues to benefit from a strong competitive moat and lower dependence on Google Search.
The $90 price target is based on 12 times Etsy, Inc.’s projected 2027 EBITDA. Oppenheimer said this represents a 10% discount to eBay Inc. (NYSE:EBAY), despite the similar growth of the two companies.
The upgrade comes after the company reported its Q2 2026 results in August. Etsy Marketplace GMS increased 7.5% year-over-year to $2.6 billion, marking the third consecutive quarter of growth and accelerating from the previous quarter.
Etsy, Inc. also announced a new $2 billion share repurchase program, signaling confidence in its strategic execution and its plans to return excess capital to shareholders. The company expects full-year 2026 GMS growth to be in the mid-single-digit range, an improvement from its earlier outlook, while its adjusted EBITDA margin guidance was tightened upward to 29% to 30%.
Challenges Remain Despite Improving Trends
However, the company said purchase frequency remains below prior-year levels, although the year-over-year decline moderated compared to Q1.
Etsy, Inc. also announced a restructuring plan that will cut its workforce by around 220 employees, or 12%. The company expects to record approximately $35 million in charges, primarily related to severance payments, employee benefits, and other associated costs. The company said that it expects the charges to be incurred and the restructuring plan to be substantially completed by the end of Q3.
What the Numbers Say
Hedge fund interest in the stock has also improved. According to Insider Monkey‘s database, 51 hedge funds held positions in Etsy, Inc. in the second quarter of 2026, an increase from 44 in the first quarter.
At the same time, short interest is relatively high. As of August 31, short interest stood at 13.72% of the company’s float, pointing to a notable level of bearish positioning in the stock.
Oppenheimer’s upgrade reflects a shift in the outlook as Etsy, Inc. enters the second half of 2026 with three consecutive quarters of GMS growth. Improving traffic trends also support the bull case. However, the key question for investors now is whether the company can use its product improvements and engagement to build and maintain buyer growth, especially as purchase frequency remains below last year’s levels.
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