Etsy (ETSY 0.34%) was once a huge winner on Wall Street. But due to macro headwinds and slower growth, the stock has disappointed -- falling 30% just this year. Investors are hoping the e-commerce site, known for its distinctive goods, can turn things around.

Etsy's current share price is just under $84 (as of Dec. 20). If this e-commerce stock triples between now and the end of 2030, investors would be looking at a compound annual growth rate of 17%. This would almost certainly beat the performances of both the S&P 500 and the Nasdaq Composite index.

But is it even a realistic outcome? Or should investors temper their expectations? Here's what you need to know.

Etsy has so many favorable business qualities

Even though growth has ground to a screeching halt due to softer economic conditions, it's easy to find reasons to fall in love with this business. Take the company's marketplace. Its focus on unique, vintage, and handmade goods is a key differentiator in the cutthroat e-commerce sector. And it's why Etsy has been able to fend off competition from the likes of Amazon or Walmart.

In fact, Etsy conducted a survey which found that 87% of buyers said the marketplace has items they can't find anywhere else. As a top shopping destination for specialized goods, Etsy stands out above the crowd. And this should support its competitive standing far into the future.

Investors will also like Etsy because it has an economic moat in its powerful network effect. Network effects are typically associated with marketplace or platform-like businesses, a category Etsy clearly falls under. This trait is present when the network becomes more valuable to all users as it gets bigger.

In Etsy's case, as it gains more buyers, sellers have a wider global customer base to target. And with more sellers, Etsy's merchandise assortment expands, making the site more valuable for buyers looking for something to purchase.

It would be extremely difficult to replicate this business model from scratch. Furthermore, Etsy's buyer base of 97.3 million and seller base of 8.8 million, coupled with Q3 gross merchandise sales of $3 billion, gives it notable scale that a new market entrant would find impossible to challenge.

And speaking of the business model, Etsy is asset-light. The company doesn't need to worry about logistics, manufacturing, or holding inventory, instead just providing the technology platform to connect buyers and sellers. The result is a highly scalable enterprise that can produce lots of free cash flow.

To be fair, management remains focused on investing in product development and marketing to boost engagement from buyers and to help sellers better run their operations. But each marginal transaction likely doesn't cost Etsy very much, which can help boost margins over the long term.

Etsy shares are ridiculously cheap

Besides solid fundamental characteristics, another potential tailwind can significantly help shareholders between now and 2030. And that's the valuation. Etsy's stock trades at a forward price-to-earnings (P/E) ratio of 17.9. Since the start of 2020, this metric has contracted by 60%, indicating heightened investor pessimism surrounding the company. The S&P 500 trades at a forward P/E multiple of 21.2.

For a quality business like Etsy, I think the cheap valuation is completely unwarranted. In my opinion, this is an above-average company, so the P/E ratio should be higher seven years from now than it is today. Investors seeking a solid buying opportunity should seriously consider owning Etsy. There's a high likelihood the stock could triple and turn $1,000 into $3,000 by 2030.