Wedbush analysts said they believe the Brooklyn-based online retailer for homemade goods is pursuing short term boosts at the expense of long-term results, according to Marketwatch.
Shares of Etsy have fallen 59.43% year-to-date.
"Analysts say that risk is already reflected in the share price," Marketwatch reports. "In the third quarter, the analysts believe Etsy can maintain its revenue growth trajectory due to more marketing, leading to more site traffic."
Earlier this year, Amazon.com (AMZN) announced that it was launching a marketplace similar to Etsy called Handmade.
Sellers appear "frustrated by mass manufactured and potentially counterfeit competition, leading them to switch to Handmade at Amazon as large VC owners sell their shares," Wedbush said.
Shares of Etsy were up 10.15% to $12.05 in mid-day trading on Tuesday.