Not too long ago, Etsy (ETSY +0.06%) seemed like one of the most promising e-commerce stocks on the market. Sales were soaring, up triple digits during the pandemic, as its online flea market saw a surge of interest during the stay-at-home period. Etsy was confident enough in its business model that it made multiple acquisitions of other peer-to-peer marketplaces, including Reverb for musical instruments, Depop for vintage clothes, and Elo7, a Brazilian version of Etsy.
Fast-forward to 2025, and Etsy's prospects look decidedly different. The company has sold Reverb and Elo7, backing away from its House of Brands strategy, and its revenue growth has flatlined since the pandemic, as it has struggled to recruit new buyers and sellers.
In its second quarter, gross merchandise sales, or the total value of goods sold on its platform, fell 4.8% to $2.8 billion, while revenue rose 3.8% to $672.7 million, driven by on-site ads and higher fees. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), active sellers, and active buyers were all down year over year.
However, something surprising just happened. Etsy just jumped to its highest point in 52 weeks on a new deal with OpenAI.
Image source: Getty Images.
What OpenAI and Etsy are doing
In a blog post on Monday, ChatGPT introduced a new tool called Instant Checkout with the help of Stripe. This tool will allow U.S. ChatGPT users to buy directly from U.S. Etsy sellers through the ChatGPT interface.
The new application helps users search for a product and get referred to Etsy, where they can check out an item and pay for it. For example, a user might get directed to Etsy if they asked ChatGPT to help them find some handmade ceramics under $100. Etsy finished the Monday session up 15.8%.
ChatGPT also partnered with Shopify on the new initiative with merchants like Glossier, SKIMS, Spanx, and Vuori, which drove Shopify stock up 6.2%.
Instant Checkout currently only supports single-item purchases, but OpenAI is planning to add multi-item purchases and expand to new merchants and regions.
NYSE: ETSY
Key Data Points
Is this a game-changer for Etsy?
One of the challenges Etsy has historically faced is with discovery. Many of its customers come directly to its site, but it's harder for the company to get sales through other channels like Alphabet's Google, especially when it is competing with larger e-commerce platforms such as Amazon and Shopify.
To that end, ChatGPT's Instant Checkout should be a benefit to Etsy, as it will help more potential shoppers find Etsy's products. The tool could also inspire other platforms like Google's Gemini to do the same, especially since shopping is a major vertical for ads on Google Search.
However, overall, this seems like a bigger move for OpenAI, rather than Etsy. After all, it's OpenAI's technology that makes this possible, and it's doing so to attract more users to ChatGPT. Etsy is an initial partner, and as ChatGPT adds more merchants, which is likely, Etsy's status in the initiative will be diminished.
On the same day, Etsy also said it was transferring its listing from the Nasdaq to the New York Stock Exchange, though the reasoning for the move wasn't clear.
The OpenAI partnership could provide a modest boost to Etsy's sales, but it will take more than that to turn the business around.
At this point, the double-digit pop looks more like a sign of desperation from investors than a legitimate reason for such a gain. Etsy investors have been waiting a long time for some good news, but they'll need something more than this to make the stock a winner.
