Etsy’s boom is over. Now sharks are starting to circle.

Once upon a time, Etsy was one of the hottest stocks in the market.

Early in the pandemic, panicked buyers who had never visited the site flocked to Etsy in search of homemade face masks that retailers couldn’t keep in stock.

The mask boom familiarized millions of locked-down Americans with Etsy as a new option, just in time for the greatest-ever boom in online shopping. That year, Etsy’s sales more than doubled, its profits more than tripled, and its stock — along with other so-called stay-at-home stocks like Zoom and Peloton — was one of the best performers in the S&P 500.

Five years later, things have changed, and sharks are starting to smell blood in the water.

From its highest closing price of all time on November 25, 2021, Etsy’s shares have fallen by more than 80% as the company has had difficulty keeping much momentum from the lockdown era.

Revenue growth has slowed from 35% in 2021 to 2.2% in 2024. Profits, while more than triple pre-Covid levels, have flatlined for two straight years.

Gross merchandise sales on its marketplace — a key bogey for analysts covering the stock — have fallen year over year for 12 consecutive quarters.

And active buyers — people who have bought something over the prior 12 months — have declined for two straight years. Disappointing quarterly numbers have been seemingly followed by downward earnings forecasts from Wall Street, in turn driving the stock still lower.

In September, Etsy was politely escorted out of the S&P 500, just four years after it was added to the blue-chip benchmark, a demotion reflecting a market value that’s shriveled from more than $35 billion in late 2021 to roughly $5 billion today. In short, no bueno.

The company has been making some strategic shifts, though some of them suggest that company leaders don’t see a short-term return to growth anytime soon.

For instance, in a March 5 comment at an investor conference, Etsy CEO Josh Silverman said the company has been adding “friction” (online retail speak for interruptions or complications to transactions) to its online mobile website in order to steer buyers toward downloading and installing its app, an act that raises the long-term purchase activity of customers.

“That’s going to cost us some in terms of near-term [gross merchandise sales], but in getting people onto the app, we believe that’s a really good long-term investment,” he said.

But the now the company has a new headache on the short-term horizon, as the last few years of thrashing around has attracted the attention of the stock market’s version of sharks: short sellers.

Short interest in Etsy — the amount of its stock in the hands of those who are betting on its price to fall — has ramped up to the highest level since its initial public offering in 2015.

Shorts now have their mitts on more than 18% of its free float, or shares available for trading — an all-time high, according to FactSet data.

The rising share of shorts in the stock suggests that the prevailing sentiment on Etsy is become increasingly negative, perhaps requiring a more radical, high-profile shift from management to convince the market that the company’s spiral isn’t permanent.

(Etsy did not reply to a request for comment by publication time.)