The last couple of years have been pretty difficult for Etsy (ETSY -0.89%) shareholders. Since the start of 2022 to the end of 2023, the stock has cratered 63%, and it currently sits 74% below its all-time high.

This is disheartening given the rebound year many growth stocks had in 2023. But value-conscious investors might want to take a closer look at this rare opportunity to scoop up a quality business.

Here are three reasons to buy this e-commerce stock like there's no tomorrow.

A differentiated offering

Etsy sells unique and handcrafted items on its namesake marketplace in a wide range of categories, including home furnishings, jewelry, apparel, and collectibles. On the surface, that doesn't sound like anything to write home about.

Take Amazon -- its entire business model is centered on offering an enormous product selection while providing customers with convenience, fast delivery, and low prices. Etsy knows it can't compete at the same level, so it doesn't.

But consider that 87% of buyers said Etsy has items they can't find anywhere else, and you'll quickly realize that Etsy has cemented itself in this niche of the e-commerce market. There's something special about a business that is able to differentiate itself in a competitive industry in the way Etsy has.

From a shopper's perspective, Etsy is a top destination when looking for one-off merchandise or gifts. This standing will be hard for any rival to replicate, and it supports long-term staying power for the business.

Network effects

Warren Buffett, whom many consider the greatest investor ever, looks for companies that have an economic moat. This is a trait that allows a business to outperform competitors and generate better financial results over the long term. Investors looking to bolster their returns should look for companies that have moats.

In Etsy's case, it benefits from network effects, which might be the strongest kind of moat around. The company has 91.6 million active buyers and 6.7 million sellers on its core marketplace, and they all gain as the platform grows with more users and transaction volume. More sellers provide a wider assortment of merchandise to choose from, while more buyers means sellers can target an expanding shopper base.

If a company wanted to create a competing network from scratch, it would be extremely difficult, and these network effects have helped build Etsy into a financially sound enterprise. The business produced $669 million of free cash flow in the last 12 months on $2.7 billion of revenue.

Compelling valuation

The final reason to scoop up shares of Etsy like there's no tomorrow has to do with the valuation. As of this writing, the stock trades for a forward price-to-earnings (P/E) multiple of 15.9. This represents a discount to the S&P 500, which sells for a forward P/E ratio of 21.2.

It's always better to pay a lower valuation for a stock than a higher one. That's because expectations are lower, and the potential upside is higher. Of course, the underlying business must also be high-quality.

Etsy's depressed valuation just doesn't make sense given all the positive factors I outlined above. Should the company's growth show signs of improvement this year, it's easy to believe the valuation will return to normalized levels, and that would be a huge win for shareholders.