Will Etsy’s (ETSY) AI and Loyalty Push Redefine Its Long-Term Engagement Strategy?

• Etsy presented at Canaccord Genuity’s 45th Annual Growth Conference on August 12, 2025, in Boston, following the release of its second quarter results that exceeded revenue expectations but showed mixed earnings performance.
• Management emphasized ongoing investment in app experience, AI-driven personalization, and loyalty initiatives, with a 7% year-over-year increase in monthly active users and plans to launch an updated loyalty program for the holiday season.
• We'll examine how Etsy’s focus on app engagement and AI-driven personalization shapes its evolving investment narrative and future outlook.

The best AI stocks today may lie beyond giants like Nvidia and Microsoft. Find the next big opportunity with these 18 smaller AI-focused companies with strong growth potential through early-stage innovation in machine learning, automation, and data intelligence that could fund your retirement.

Etsy Investment Narrative Recap

To be a stakeholder in Etsy today, you need confidence in the company’s ability to turn user growth and advanced personalization into long-term revenue and margin expansion, despite recent softness in key engagement and sales metrics. The recent rally in Etsy shares following conference commentary and stronger revenue did not meaningfully diminish the short-term risk: persistent declines or stagnation in gross merchandise sales remain the clearest threat to Etsy’s outlook, while ongoing investment in the app and AI-driven features continues to be the critical catalyst to monitor.

Among the company’s latest initiatives, the upcoming launch of an updated loyalty program for the holiday season stands out as particularly relevant. Management views loyalty as tied to higher purchase frequency and stronger customer retention, which could directly address concerns about waning buyer engagement and GMS headwinds highlighted in recent results. Whether these efforts achieve measurable improvement ahead of year-end remains a central question.

Yet against the positive signals, investors should be aware that sustained declines in buyer count and spend per buyer could still challenge Etsy’s ability to deliver on its…

Read the full narrative on Etsy (it's free!)

Etsy's narrative projects $3.1 billion revenue and $376.3 million earnings by 2028. This requires 3.5% yearly revenue growth and a $212.3 million earnings increase from $164.0 million today.

Uncover how Etsy's forecasts yield a $64.38 fair value, a 8% downside to its current price.

Exploring Other Perspectives

Simply Wall St Community members set Etsy’s fair value between US$64 and US$136 across seven projections. While many expect rising app engagement to lift performance, renewed drops in gross merchandise sales call for closer attention to underlying demand trends.

Explore 7 other fair value estimates on Etsy - why the stock might be worth 8% less than the current price!

Build Your Own Etsy Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Etsy research is our analysis highlighting 2 key rewards and 5 important warning signs that could impact your investment decision.
• Our free Etsy research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Etsy's overall financial health at a glance.

Interested In Other Possibilities?

Markets shift fast. These stocks won't stay hidden for long. Get the list while it matters:

• We've found 19 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.
• Uncover the next big thing with financially sound penny stocks that balance risk and reward.
• AI is about to change healthcare. These 25 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10b in market cap - there's still time to get in early.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com