Etsy Stock Plunges as CEO Quits – Depop Exec Takes Over to Revive Growth

CEO Shake-Up: Etsy announced that CEO Josh Silverman will step down after eight years at the helm, with Kruti Patel Goyal – the company’s Chief Growth Officer and former Depop CEO – set to take over as CEO on January 1, 2026 ^[1] ^[2]. Silverman will transition to executive chairman through 2026 to help ensure a smooth handover ^[3]. Goyal, 49, is a 13-year Etsy veteran who led Etsy’s UK-based secondhand fashion marketplace Depop since 2022 ^[4] ^[5].
Slowing Sales & Earnings Beat:Etsy’s third-quarter results (Q3 2025) were mixed. Revenue rose about 2.4% year-over-year to $678 million, slightly beating analyst estimates ^[6], and EPS of $0.63 topped forecasts by ~$0.10 ^[7]. Net income jumped 32% to $75.5 million, aided by a one-time foreign exchange gain ^[8]. However, gross merchandise sales (GMS) – the value of goods sold on Etsy’s platforms – fell to $2.72 billion, down 6.5% as reported (or roughly flat excluding a divested unit) and below market expectations (~$2.76B) ^[9]. Crucially, Etsy saw fewer active buyers and sellers on its marketplace: active buyers declined about 5% year-on-year to 86.6 million, and active seller count also dropped versus last year ^[10]. This marks the latest quarterly decline in Etsy’s core sales volume amid a broader post-pandemic slowdown.
Stock Tumbles on News: Investors reacted sharply to the leadership change and downbeat sales trends. Etsy’s stock (NASDAQ: ETSY) plunged about 5% in pre-market trading ^[11] on Oct. 29 after the announcements, and at one point shares were down nearly 9% during the day’s session, reflecting skepticism about Etsy’s growth trajectory. The stock has already been under pressure – it’s down roughly 82% from its all-time high in 2021 ^[12], and Etsy was even removed from the S&P 500 index in 2024 amid its decline ^[13]. The latest results and Silverman’s exit appeared to compound market jitters about Etsy’s future.
Macro & Competition Headwinds: Management acknowledged tough market conditions. Etsy’s sales have been dented by weak consumer spending on discretionary goods and fierce e-commerce competition ^[14]. Shoppers are increasingly budget-conscious post-pandemic, and rivals like Amazon and eBay remain formidable. Additionally, shifting U.S. trade policies have introduced uncertainty – Etsy cited “ever-changing tariff policies” under the current administration ^[15] (e.g. the end of the duty-free import exemption) as a factor weighing on its marketplace. This challenging backdrop has slowed Etsy’s growth to a crawl: the company forecasts full-year 2025 revenue will rise only about 1% – a stark drop from the double-digit pandemic boom years ^[16].
New CEO’s Vision – Leaning into AI & Etsy’s Uniqueness: Incoming CEO Kruti Goyal signaled that Etsy will continue adapting to evolving customer needs “in a way that stays true to who we are, leaning into what makes us different: human connection, our sellers’ creativity and a distinctly personal shopping experience.” ^[17] Goyal’s mandate will be to reignite growth without losing Etsy’s artisanal ethos. A key part of that strategy is leveraging artificial intelligence. Under Silverman, Etsy has invested in AI tools for search and personalization, and Goyal is expected to accelerate this. “We think Etsy is uniquely positioned to win in AI,” Silverman said, noting Etsy’s one-of-a-kind inventory and strong tech culture ^[18]. For example, Etsy recently partnered with OpenAI to let shoppers use ChatGPT as a digital personal shopper – a feature that sent Etsy’s stock surging ~14% in late September on optimism about AI-driven e-commerce ^[19]. The company is betting that machine learning can help connect buyers with Etsy’s eclectic products in a “sea of sameness” online retail world ^[20].

A Leadership Shake-Up to Navigate an “Inflection Point”

Etsy’s CEO transition comes at a pivotal moment for the 18-year-old online marketplace. Josh Silverman has led Etsy since 2017, steering it through a period of rapid pandemic-era growth followed by recent turbulence. His departure, effective end of this year, was announced just ahead of Etsy’s Q3 earnings and caught many by surprise. The company simultaneously unveiled that Kruti Patel Goyal, its current President and Chief Growth Officer, will assume the CEO role on January 1, 2026 ^[21] ^[22]. Goyal will also join Etsy’s board upon taking over.

Goyal is a familiar name to Etsy employees and sellers. She joined Etsy back in 2012 and held various leadership roles, including Head of Marketplace Integrity and Chief Product Officer ^[23]. Notably, since late 2022 Goyal has been CEO of Depop, the youth-focused fashion resale app Etsy acquired for $1.6 billion in 2021. She spent nearly three years in London turning around Depop – which caters to Gen Z thrift shoppers – before Silverman asked her “to come back to Etsy at the beginning of this year” to help lead the core business ^[24]. In early 2025 Etsy created a new Chief Growth Officer role for Goyal, effectively positioning her as Silverman’s second-in-command and heir apparent ^[25]. Now, as CEO, Goyal will be tasked with reviving growth across Etsy’s family of brands (which includes Etsy’s main handmade goods marketplace, Depop, and musical instrument marketplace Reverb) while preserving their distinct creative communities.

Both Silverman and Etsy’s board have expressed confidence in Goyal. “Kruti is a world-class leader with a proven ability to drive growth by obsessing over the customer experience,” Silverman said of his successor ^[26]. During her tenure at Depop, Goyal helped that platform return to growth – Depop’s sales (GMS) jumped nearly 40% year-over-year last quarter ^[27], outpacing the stagnation in Etsy’s core marketplace. Etsy’s leadership evidently hopes she can bring some of that spark back to the flagship Etsy platform. Silverman will stay on through 2026 as Executive Chair to advise Goyal ^[28], and Etsy’s current board chairman (venture capitalist Fred Wilson) will step aside to make room.

In a statement, Goyal struck a balance between change and continuity, saying Etsy “will evolve” as shoppers’ needs change, “but we’ll do it in a way that stays true to who we are” – emphasizing human connection and sellers’ creativity ^[29]. That message was likely meant to reassure Etsy’s millions of independent artisans that new growth initiatives (like AI technology or marketing campaigns) won’t dilute the company’s handmade, community-centric identity.

Earnings Underwhelm as Shoppers Pull Back

The leadership news overshadowed what was a soft Q3 earnings report for Etsy. Sales on the platform are still shrinking in the post-pandemic economy. Etsy’s consolidated gross merchandise sales (GMS) for Q3 2025 came in at $2.725 billion, down about 6.5% from the same quarter last year ^[30]. Even excluding the impact of selling off Reverb (Etsy divested its music gear marketplace in June), GMS was roughly flat (+0.9% YoY) – meaning Etsy isn’t seeing much growth in transaction volume ^[31]. This marked the fourth consecutive quarter of declining or flat GMS for Etsy, a stark reversal from the double-digit gains of 2020-21 when homebound consumers flocked to online craft shopping.

Active user metrics also declined. Etsy’s active buyer count fell to 86.6 million (on a trailing 12-month basis), down 5% year-over-year ^[32]. These are shoppers who made at least one purchase in the past year. The number of active sellers on Etsy’s marketplace dropped to around 5.5 million ^[33], indicating some sellers have exited or gone inactive amid the sales slowdown. (For context, Etsy and Depop combined connected about 95 million buyers and 8 million sellers worldwide as of last year ^[34], so the Etsy platform still commands a huge user base, but that base has been eroding after peaking during COVID.) The company did manage to reactivate 6.6 million lapsed buyers last quarter through marketing and promotions ^[35], but it wasn’t enough to offset attrition. Average spending per buyer is also slipping – a sign that consumers are cautious.

On the brighter side, Etsy’s revenue and earnings beat Wall Street’s expectations. Q3 revenue rose ~2.4% to $678.0 million ^[36], slightly above consensus of ~$655 million ^[37]. The modest revenue uptick despite falling GMS implies Etsy is earning more per transaction – thanks to higher take rates (transaction fees and ad fees). In fact, Etsy’s transaction fee hike last year and growth in its advertising services pushed its revenue “take rate” to 24.9% of GMS, up from 22.7% a year ago ^[38]. This helped offset the drop in total merchandise sales.

Etsy managed to stay profitable as well. It earned $75.5 million in net income for Q3 ^[39], a 32% increase from a year ago, partially boosted by a foreign exchange gain. Stripping out some items, adjusted EBITDA was $172 million (25% margin) – still healthy, though slightly below last year ^[40] ^[41]. The company also continued returning capital to shareholders, repurchasing about $120 million worth of stock in Q3 ^[42] ^[43]. In short, Etsy’s finances aren’t in crisis – it’s generating profits and has a hefty $1.6 billion cash war chest ^[44] ^[45] – but the top-line growth has stalled out, which is a major concern.

Management attributed the weak sales to the tough economic climate for non-essential purchases. “This is an incredibly challenging environment for spending on consumer discretionary items,” Silverman noted, as high inflation and rising interest rates squeeze shoppers’ wallets ^[46]. Etsy also faces competition from larger retailers and platforms, and some negative PR among its seller community over increased fees and policy changes. To reignite buyer activity, Etsy has been investing in marketing (especially around gifts), site search improvements, and a new loyalty program pilot ^[47] ^[48]. But those efforts have yet to generate a meaningful rebound in sales growth.

Notably, one bright spot was Etsy’s Depop subsidiary. Under Goyal’s leadership, Depop’s GMS surged ~39% year-over-year in Q3 ^[49], as Depop rolled out new features and marketing targeting U.S. Gen Z users. Depop’s success suggests there is still growth to be found in niche areas of recommerce, a positive sign as Etsy tries to diversify its revenue streams.

Wall Street’s Reaction: Uncertainty Weighs on the Stock

For investors, Etsy’s latest moves raise as many questions as answers. The stock’s initial 5% drop on Oct. 29 was a knee-jerk reaction to the one-two punch of underwhelming sales and the CEO departure. Some analysts see Silverman’s exit as an admission that “slowing growth in recent years” requires new leadership and fresh strategies ^[50]. Silverman is credited with turning Etsy around once before – he took over in 2017 after a period of stagnation and successfully grew the company’s revenue fivefold during his tenure, partly via acquisitions like Depop. His stepping down could signal the end of an era. Kruti Goyal’s ascension, meanwhile, is being interpreted as Etsy doubling down on internal talent who understand its unique culture (as opposed to bringing in an outside CEO). The Economic Times noted that Goyal is taking over an e-commerce business that had been “suffering slowing growth” and now faces the task of navigating an “AI era” of retail ^[51].

In the stock market, Etsy shares have been beaten down throughout 2022–2025, and the latest developments did little to inspire immediate confidence. By some measures Etsy’s valuation looks tempting – the stock trades at a far lower price-to-sales multiple than it did at the height of the pandemic boom. But with growth essentially flat and active users declining, investors are grappling with how to value Etsy in a post-COVID normal. Short interest in the stock has risen to nearly 19%, reflecting significant bearish sentiment ^[52]. Many traders are likely taking a “show me” approach and waiting to see if Goyal can deliver a tangible turnaround.

It doesn’t help that macro-economic clouds hang over consumer-focused companies like Etsy. Persistently high interest rates, the resumption of student loan payments in the U.S., and global economic uncertainty are all headwinds to consumer spending on non-necessities. On top of that, changes in trade policy have introduced friction for Etsy’s cross-border sales. (For instance, a recent U.S. rule change eliminated the “de minimis” import tax exemption on low-value packages, a move that hurts sellers on Etsy by subjecting many handmade imports to duties ^[53] ^[54].) Such external factors are largely out of Etsy’s control, but they add another layer of challenge to growing volumes again.

Can Etsy Get Its Groove Back? – Outlook and Strategies

The road ahead for Etsy will depend on whether the company can rekindle buyer engagement and order growth in the coming quarters. For the all-important holiday quarter (Q4 2025), Etsy issued cautious guidance: it expects GMS of $3.5 billion to $3.65 billion ^[55], which would likely be a low single-digit percentage decline versus last holiday season. In other words, no quick rebound is on the horizon – Etsy is essentially hoping to stabilize sales at best in the near term. Achieving even that will require executing well on several fronts:

Tapping AI to Enhance Shopping – Etsy is investing heavily in artificial intelligence to improve search relevance, recommendations, and overall user experience. The company rolled out an AI-powered gift-finder tool in 2024 that suggests gift ideas based on occasions and recipient traits ^[56]. It has also used machine learning for ad targeting and to help sellers write better product descriptions ^[57]. Most recently, Etsy’s integration with OpenAI’s ChatGPT as a shopping concierge made headlines and briefly boosted the stock ^[58]. Silverman and Goyal believe AI can help Etsy surface more of its long-tail, one-of-a-kind inventory to shoppers in personalized ways. This could differentiate Etsy from Amazon’s commoditized listings. “We want to use AI to help consumers and sellers avoid the online shopping world’s ‘sea of sameness,’” Silverman said, highlighting how unique inventory is Etsy’s competitive advantage ^[59]. If Etsy’s AI initiatives can make the site feel more curated and discovery-rich, that may entice buyers to return more frequently.
Marketing the “Human” Element – Etsy is simultaneously touting its human-centered ethos as a selling point. In a retail landscape dominated by algorithm-driven marketplaces, Etsy’s brand is about personal connection – knowing there’s a real artisan behind each item. The company launched a “creative, human connection” ad campaign in late 2024 ^[60] and has focused its messaging on gift-giving and special occasions (where handcrafted items carry extra sentiment). Goyal’s statement about “leaning into what makes us different” ^[61] suggests this strategy will continue. If successful, Etsy could carve out a resilient niche even if consumers pull back on generic retail purchases – essentially positioning Etsy as the go-to for meaningful, unique gifts and bespoke goods.
Expanding in Growth Categories and Markets – Etsy might seek growth by expanding further into categories that still have momentum (for example, secondhand fashion via Depop, or musical instruments via Reverb’s remaining operations under new ownership). International expansion is another lever; Etsy has presence in markets like the UK, Germany, and Australia, but could localize more. However, currency fluctuations and global economic conditions are a concern, as seen by the foreign exchange gains/losses impacting its earnings ^[62].
Seller Support and Fee Balancing – Etsy will also need to keep its large seller community happy to maintain the variety and supply of goods. The company faced an online seller strike in 2022 when it hiked transaction fees. Goyal’s leadership might aim for a more balanced approach to monetization – growing revenue through increased sales volume rather than further raising seller fees, especially in a tough economy. She will have to rebuild seller trust so that more makers are incentivized to list and promote their products on Etsy, which in turn drives more choice for buyers.

It’s clear that Kruti Patel Goyal has a challenging task ahead. She must convince both the marketplace’s users and Wall Street that Etsy can return to growth mode without losing its soul. The company’s fundamentals aren’t broken – Etsy is solidly profitable and still facilitates over $12 billion in annual merchandise sales ^[63] – but it needs to prove it can resume even mid-single-digit percentage growth in a post-pandemic world. As of now, analysts remain cautious, with some arguing that the stock may languish until a clear inflection in GMS occurs or new initiatives materially boost revenue. There is hope that the macro environment will eventually improve, effectively lifting the e-commerce tide. Etsy’s team often points out that discretionary spending will recover with time, and that user behavior remains sticky (over 40% of Etsy buyers are repeat purchasers). If the economy stabilizes and Etsy’s AI-boosted shopping experience clicks with consumers, the company could surprise skeptics with a turnaround.

For Etsy’s millions of sellers and buyers, the incoming leadership change is significant. Silverman’s tenure saw Etsy grow into a global platform with nearly 95 million buyers and 8 million sellers ^[64], and his strategic bets (like acquiring Depop and raising fees to invest in growth) redefined the business. Now Goyal, a champion of Etsy’s seller community who also understands Gen Z trends from Depop, will write the next chapter. Investors and crafters alike will be watching closely to see if she can craft a renaissance for Etsy in 2026 and beyond – one that combines high-tech innovations with the company’s handmade, “keep commerce human” ethos ^[65].

Sources: CNBC ^[66]; Bloomberg ^[67] ^[68] ^[69]; Reuters ^[70] ^[71]; Seeking Alpha ^[72] ^[73]; TechStock² (ts2.tech) ^[74]; Etsy press release ^[75].

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