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Etsy, Inc. (ETSY) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Etsy, Inc. (ETSY)

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Intrinsic Value (DCF)

Current$60.39
→
Intrinsic$186.10
+208%
$122.89$186.10$306.04
Market implies 1% growth for 5 years
DCF analysis suggests ETSY could have 208% upside at 25% growth — verify assumptions match your view.
At $60, the market prices in only 1% growth — below historical 25%, suggesting low expectations.
Range: Bear $123 → Bull $306. Current price implies expectations below the bear case — very conservative expectations.
Discount ↓Growth →21%23%25%27%
8%$232$251$272$294
10%$158$172$186$201
12%$118$128$139$150
14%$92$100$108$117

Bull Case

  • Bull case ($306) offers 407% upside at 30% growth, 9% discount
  • Price below even worst-case scenario — strong margin of safety
  • Market-implied growth (1%) ≤ historical CAGR (25%)

Bear Case

  • Bear case ($123) with 20% growth, 12% discount rate
  • Using 25% growth — aggressive, watch for mean reversion
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5-Year Free Cash Flow Projection

Year 1$922.83M
Year 2$1.15B
Year 3$1.44B
Year 4$1.80B
Year 5$2.25B
Terminal$33.15B

📐 Model Inputs

Growth Rate25.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$738.26MTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is ETSY stock undervalued or overvalued?
🟢 UNDERVALUED

ETSY trades at $60.39 vs. our DCF-derived intrinsic value of $152.11, implying +148% upside. At a 10.0% WACC and 25.0% projected FCF growth, the market appears to be underpricing the present value of ETSY's future cash flows. The bear case ($95.65) still suggests upside, providing margin of safety.

What is ETSY's intrinsic value?

Using a 5-year DCF model: Base FCF of $738M, projected at 25.0% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 10.0% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $1.58B net debt and dividing by 0.13B shares: Bear $95.65 | Base $152.11 | Bull $235.25. Current price $60.39 implies +148% to base case.

How is ETSY's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 25.0% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=10.0%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($21.61B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 29.3x.