Morgan Stanley and Goldman Sachs both initiated coverage of Etsy Monday, with Morgan Stanley rating the stock equal-weight and Goldman rating it neutral. Wedbush had previously begun coverage but on Monday downgraded the stock to underperform from neutral, pointing to a higher-than-expected risk of goods sold on the site being counterfeit.
Since closing its first day of trading at $30, Etsy have trended downwards ever since, closing $Friday at 22.71, a loss of nearly 35%. Shares were falling sharply in pre-market trading on Monday, down 9.7% to $20.50.
Brooklyn-based Etsy offers a unique value proposition to a niche market, with Goldman Sachs estimating that it has the potential to reach a $70 billion market of 459 million buyers and 140 million crafters, and Morgan Stanley estimating an addressable market of at least $34 billion. Both companies agree that Etsy's potential for success is already priced into its stock.
Here's what the analysts had to say: