Etsy (NYSE: ETSY) is showing signs that its turnaround is finally working. For one, after reporting better-than-expected second-quarter earnings, JPMorgan upgraded the stock to an Overweight rating and set a $100 price target. The bank believes the company’s recent improvements are helping the company grow again after a difficult stretch.
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Two, one of the biggest reasons for the upgrade is Etsy’s improving marketplace sales. The company has now reported three straight quarters of year-over-year growth in gross merchandise sales (GMS).
Even better, sales growth is speeding up. The company’s GMS increased just 0.1% in the fourth quarter of 2025. By the second quarter of 2026, that growth had improved to 7.5%. That’s an encouraging sign that more shoppers are returning to the platform and spending more money.
Strong Earnings Beat Expectations
Etsy also delivered a strong earnings report. The company earned 98 cents per share, beating Wall Street estimates by 25 cents. Revenue came in at $668.3 million, up 6.2% from a year ago. That was more than $21 million above analysts’ expectations.
Along with strong earnings, the company announced a new $2 billion share buyback program. Buybacks reduce the number of shares outstanding, which can increase earnings per share over time and return value to shareholders.
Management also became more optimistic about 2026. They now expect gross merchandise sales to grow by a mid-single-digit percentage for the full year. The company said:
“We anticipate that GMS growth at Etsy will be in the mid-single-digit range for the full year 2026.” Etsy also raised its profit outlook, with management now expecting its adjusted EBITDA margin to be between 29% and 30% for the year.
JPMorgan says Etsy’s recent investments are making a difference
The company has spent the past several quarters improving its website and mobile app. It has also made it easier for shoppers to find products by improving its search tools. At the same time, Etsy has expanded customer loyalty programs that encourage shoppers to return and make additional purchases.
The company is also investing in social commerce, making it easier for buyers to discover products through social media and other online channels. And, according to JPMorgan, these improvements are helping attract new customers while keeping existing shoppers active on the platform.
For the third quarter, the company expects gross merchandise sales to be between $2.53 billion and $2.58 billion, or 4% to 6% year-over-year growth. Management also expects its take rate to remain around 26%. Adjusted EBITDA margins are expected to be between 28% and 30%, showing the company expects to remain profitable while continuing to invest in future growth.
The Bottom Line
Etsy’s latest earnings report gives investors several reasons to feel encouraged. The company beat expectations on both earnings and revenue, raised its outlook for the full year, and announced a $2 billion share buyback program. At the same time, marketplace sales have now grown for three straight quarters, with growth continuing to improve.
JPMorgan believes Etsy’s investments in search, mobile technology, customer loyalty, and social commerce are helping strengthen the business and support future growth. While not every Wall Street analyst is bullish on the stock, Etsy appears to be moving in the right direction. If the company can keep growing sales and improving profits, its turnaround could continue to gain momentum over the next year.
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