The stock market rewards businesses that are firing on all cylinders. That’s exactly what happened with Etsy (NYSE: ETSY), whose shares skyrocketed 2,160% in the five years leading up to their peak in November 2021.
However, the market will also punish bad financial performance. That’s why this same business has seen its shares tank 78% from that record (as of April 21).
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Here are three must-know metrics that reveal precisely why this once booming e-commerce stock is struggling mightily.
Etsy’s fall from grace can be blamed on weak trends in the core marketplace’s gross merchandise sales (GMS), a measure of the dollar volume of transactions occurring on the platform. This figure totaled $10.5 billion in 2025, down 4% from the year before. And it dropped 14% from a peak of $12.2 billion in 2021.
It’s obvious that Etsy must find a way to grow this key performance metric if it wants to generate durable revenue gains in the long run. For what it’s worth, management expects GMS to rise this year, so this might be the start of a positive trend.
In 2021, during a time of heightened online shopping activity due to the COVID-19 pandemic, Etsy posted net income of $494 million. That number represented a year-over-year increase of 41.3%.
Fast-forward four years, and the company reported net income of $163 million in 2025. This translates to a troubling 67% decline. As mentioned, GMS has trended lower, leading to plummeting profits. It’s no wonder the stock has gotten crushed.
Etsy’s cost structure has gotten bloated as it aims to recharge its business. Operating expenses rose 50% from $1.2 billion in 2021 to $1.8 billion in 2025, with notable jumps in marketing and product development.
Etsy’s weak GMS and shrinking profit base can partly be blamed on the broader macro environment. On the one hand, it’s admirable what this business has built, finding a niche in the competitive e-commerce market by offering differentiated goods. This position makes it hard for rivals to topple Etsy.
On the other hand, this means that the company depends on strong discretionary spending behavior. Its products can be viewed as nice-to-have items instead of essentials. Consumer confidence hit an all-time low in the month of April. And this closely watched economic indicator has moved downward over the past few years, tracking with Etsy’s weaker financial performance.
