Etsy Earnings: Little Change to Constructive Long-Term Stance After Analyzing Results; Shares Cheap

While there were plenty of moving pieces to analyze in wide-moat Etsy's second-quarter earnings report, we saw little that would materially alter our constructive long-term view of the battered e-commerce company. We're encouraged by the progress its "gift mode" initiative has made with the 27% of marketplace sales tied to gifting growing 4.1%, but those green shoots were largely offset by weakness elsewhere, with the rest of the core marketplace declining an implied 5.9% annually, by our math. With the firm's guidance for low-single-digit declines in platform sales for the quarter to come and full-year adjusted EBITDA margins of 27.4% or better aligning with our prior expectations, we don't expect any meaningful change to our $100 fair value estimate. We continue to see long-term value in Etsy, but acknowledge that the firm's superdiscretionary product suite exposes it disproportionately to current discretionary spending weakness.