Etsy is receiving a more constructive assessment from Bank of America as improving marketplace trends begin to challenge concerns over the durability of its recovery. BofA upgraded the stock to Buy from Neutral and raised its price target to $105 from $88, pointing to stronger execution under CEO Kruti Patel Goyal, improving mobile engagement and what it considers conservative guidance.

Marketplace Growth Is Showing Greater Momentum

BofA’s upgrade comes after Etsy reported a meaningful improvement in its underlying marketplace performance. In the second quarter, Etsy marketplace gross merchandise sales reached $2.6 billion, increasing 7.5% year over year and marking the third consecutive quarter of growth. Revenue rose 9.3% to $668 million, while adjusted EBITDA reached $195 million, representing a 29.2% margin.

The company has also reported sequential improvement across several of the metrics that drive marketplace activity, including active buyers, purchase frequency and average order value. Etsy said GMS per active buyer reached $124 on a trailing 12-month basis, up 2.8% year over year, suggesting that the improvement is not solely dependent on adding new customers.

BofA’s assessment goes further, arguing that third-party data points to U.S. sales growth of 21% year over year in June and 17% in July. The bank also highlighted Etsy’s four strategic growth priorities and described recent execution under Goyal as more durable than previously expected.

Mobile Engagement Becomes an Important Growth Lever

One of the more significant developments is Etsy’s increasing reliance on its mobile ecosystem. The company reported that mobile-app GMS grew 12.5% year over year in the second quarter and accounted for approximately 47% of total marketplace GMS. App engagement also improved, with visits per monthly active user and orders per visit both increasing year over year.

BofA argues that the importance of mobile extends beyond transaction volume. According to the bank’s analysis, mobile buyers have a lifetime value approximately 40% higher than other buyers, potentially creating additional benefits through personalization, conversion and marketing efficiency. If sustained, that dynamic could improve the economics of Etsy’s customer acquisition and retention model rather than simply increasing headline sales.

The distinction is important because Etsy’s recovery is being judged not only on whether GMS returns to growth, but also on whether the company can generate more valuable and repeat purchasing relationships. The company’s own second-quarter data showed that mobile GMS growth accelerated while non-app GMS also returned to growth, suggesting the improvement is not limited to a single sales channel.

Depop Sale Strengthens Capital Allocation Flexibility

Etsy’s strategic reshaping is another factor behind the more constructive view. The company completed the sale of Depop to eBay on July 30 for approximately $1.4 billion in cash, including the $1.2 billion purchase price and additional purchase-price adjustments and interest. Etsy has indicated that proceeds will support general corporate purposes, investment in the core marketplace and an accelerated share-repurchase program.

The company authorized a new $2 billion share-repurchase program on August 3. That provides substantially more capital-allocation flexibility following the Depop transaction, although the ultimate effect on earnings per share will depend on the timing and price of future repurchases. Etsy is also restructuring its workforce, with a planned reduction of approximately 220 employees, or 12%, as management seeks to simplify the organization and improve operating efficiency.

For the market, the key question now is whether Etsy can convert improving marketplace activity into sustained growth and stronger profitability. BofA’s upgrade suggests greater confidence that this process is becoming structural rather than temporary, but the company still faces the challenge of maintaining consumer engagement while navigating competitive pressure across global e-commerce.

Looking ahead, investors will be watching Etsy’s ability to sustain GMS growth, mobile engagement and buyer spending as prior-year comparisons become less favorable. The execution of the post-Depop capital-allocation strategy, the impact of restructuring and the durability of U.S. marketplace momentum will be particularly important indicators of whether the company’s improving operating trajectory can support the more optimistic expectations now reflected in BofA’s $105 price target.