Etsy

ETSY

Market cap $7.01B

In September 2020, handcrafted marketplace Etsy (ETSY 2.17%) was included in the S&P 500 -- surprisingly before Tesla. While inclusion in the popular index didn't do anything for Etsy's business, many investors saw it as a moment of validation.

During the depths of the pandemic, Etsy (ETSY -5.46%) was booming, as spending activity on its online marketplace soared. Growth was through the roof, which sent shares higher.

When a stock has high short interest, investors assume the bears must know something they don't and proceed with caution. But high short interest alone doesn't always reflect a problem.

During the five-year period leading up to their all-time high, Etsy (ETSY 3.92%) shares had soared an impressive 2,160%. The company was doing well before the pandemic, but the health crisis supercharged spending on the online marketplace, leading to soaring revenue and earnings.

Shares of Etsy (ETSY -1.82%), an e-commerce specialist, soared in the early pandemic years as much retail activity shifted to online channels. However, that tailwind didn't last, and the stock has been southbound since reaching its peak in late 2021.

The integration will allow users to buy products from Etsy (ETSY -1.88%) while remaining on the ChatGPT platform.

Short interest is a powerful market force that can not only cap gains but drive share prices lower, but not always. Sometimes, even the short sellers get things wrong.

Etsy (NASDAQ:ETSY), a peer of eBay (NASDAQ:EBAY) in the retail industry, trades at a lower valuation based on price-to-operating-income metrics. However, it stands out for delivering stronger growth in both revenue and operating income compared to eBay.

Handcrafted marketplace Etsy (ETSY -0.19%) reported a nearly 5% drop in gross sales on its platform when it released financial results for the second quarter of 2025. But OpenAI -- the world's most recognizable artificial intelligence (AI) start-up -- could finally give the flailing marketplace the boost that it needs.

Many things can drive a stock's price higher, fewer that can do it sustainably, and cash flow and capital return top the list. Capital return, in this case, share buybacks, can provide significant leverage for investors, but there is a catch.