Etsy Inc. (NASDAQ:ETSY)

Debt to Equity Ratio

The debt to equity ratio demonstrates an overall increasing trend from March 2017 through June 2022. Initially, the ratio remained relatively stable around 0.18 to 0.24 until the end of 2017. A significant rise is observed starting in early 2018, with the ratio increasing sharply and reaching values as high as 4.38 in June 2021. This elevated level remains above 3.5 through mid-2022, suggesting a substantial increase in leverage relative to shareholder equity over the period.

Debt to Capital Ratio

This ratio also shows a significant upward trend. Starting from approximately 0.15 to 0.19 in early 2017, it nearly triples to exceed 0.8 by late 2021 and mid-2022. There is a marked jump between mid-2019 and mid-2021, indicating a considerable increase in the proportion of debt financing within the capital structure. The spike to 1.34 in the last available data point may reflect an accounting or classification change but suggests extremely high leverage in terms of total capital.

Debt to Assets Ratio

The debt to assets ratio similarly shows a pronounced upward trajectory, rising from around 0.12 to 0.13 in early 2017 to peaks near 0.7 by 2021 and finally close to 1.0 in the last recorded quarter. This trend indicates an increasing portion of the company’s assets being financed through debt, highlighting increased financial risk over the time span analyzed.

Financial Leverage Ratio

The financial leverage ratio escalates significantly from roughly 1.5-1.8 range in 2017 to above 6.0 by mid-2021, followed by a slight decline but remaining elevated around 5.5 to 6.2 thereafter. This increase corresponds with the rising debt ratios, signaling a growing reliance on debt for financing relative to equity. The elevated leverage levels indicate heightened financial risk and potentially greater interest obligations.

Overall, the data reveals a consistent pattern of increasing financial leverage and debt reliance from 2017 through mid-2022. The company’s debt levels relative to equity, capital, and assets all display substantial growth, which correspond with a marked increase in financial leverage. This trend suggests a strategic shift towards more debt financing, which may enhance growth potential but also elevates financial risk exposure and interest burden over time.

Total Debt

The total debt exhibited a generally rising trend over the observed periods. Starting from approximately $70.9 million in March 2017, the debt remained relatively stable until the end of 2017. A marked increase occurred in early 2018, with debt levels moving from around $333 million in March 2018 to $847 million by December 2019. This upward trajectory continued into 2020 and 2021, with notable acceleration in debt between June 2021 and December 2021, where debt surged from approximately $1.35 billion to over $2.3 billion. Total debt then stabilized around the $2.38 billion mark through mid-2022.

Stockholders’ Equity (Deficit)

Equity showed growth from March 2017 at about $295 million, increasing steadily through 2017 and into early 2018, peaking near $442 million by June 2019. However, a decline followed towards the end of 2019, rebounding briefly in 2020 with a peak at approximately $742 million in June 2021. Subsequently, equity decreased significantly, turning negative by September 2022, reaching a deficit of approximately $606 million. This movement suggests increasing financial leverage and possible challenges impacting retained earnings or valuation adjustments.

Debt to Equity Ratio

The debt to equity ratio started low, between 0.18 and 0.24 in 2017, reflecting conservative leverage. As total debt rose and equity fluctuated, the ratio climbed sharply in 2018, reaching figures near or above 0.9, indicating increased leverage. The ratio spiked dramatically from 2.16 in September 2019 to a peak of 4.38 by December 2021, coinciding with surges in debt and reductions in equity. By mid-2022, the ratio remained high, above 4.0, consistent with the observed equity deficit. This indicates that the company significantly increased its relative debt burden over the period, raising potential concerns about financial risk and solvency.

Total Debt

The total debt exhibited a significant upward trend over the analyzed periods. Starting at approximately $70.9 million in March 2017, debt remained relatively stable around the $70-85 million range through mid-2019. A marked increase began in late 2019, surging from roughly $840 million in September 2019 to reach a peak of approximately $2.38 billion by mid-2022. This reflects a broad and sustained rise in indebtedness over the five-year span.

Total Capital

Total capital also trended upward, albeit with more moderate fluctuations relative to debt. It rose from around $366 million in March 2017 to a peak of about $3.06 billion in March 2022. However, unlike debt, total capital showed a peak and a subsequent decline toward the end of the series, dropping from roughly $3.07 billion in March 2022 to $1.78 billion in September 2022. This late-period contraction contrasts with the steady growth observed previously.

Debt to Capital Ratio

The debt to capital ratio demonstrated a notable progression upward, indicating an increasing reliance on debt in the company’s capital structure. Initially low at around 0.15-0.19 in 2017, this ratio jumped to approximately 0.46-0.48 in 2018, showing a substantial change in leverage. The ratio continued to rise, reaching its highest value of 1.34 by the last reported period in September 2022. There was a particularly sharp increase starting from 2021, moving from roughly 0.6 to above 1.3, suggesting that total debt began to exceed total capital by a significant margin, implying very high leverage and potential risk.

Summary of Observations

Over the observed quarters, there is a clear pattern of increasing debt outpacing the growth in total capital, leading to a significant elevation in the debt to capital ratio. This trend indicates a shift toward a more leveraged capital structure, especially pronounced from late 2019 through 2022. The sudden spike in both total debt and the debt to capital ratio in 2022 highlights a period of rapid financial change, which may warrant further analysis to understand underlying causes or implications. The recent decline in total capital coupled with sustained high debt levels suggests potential stress in capital adequacy during the final quarters.

Total Debt

The total debt exhibited a relatively stable trend from March 2017 through June 2019, fluctuating slightly around the range of approximately 70,000 to 350,000 thousand US dollars. Beginning in September 2019, there was a marked increase in total debt, rising sharply to over 840,000 thousand US dollars and continuing an upward trajectory reaching a peak of nearly 2,382,000 thousand US dollars by December 2021. After this peak, the debt stabilized and plateaued around 2,388,000 thousand US dollars through to the last reported period in September 2022.

Total Assets

Total assets demonstrated consistent growth from March 2017 to September 2021, increasing from approximately 530,000 thousand US dollars to over 3,500,000 thousand US dollars, reflecting a strong expansion phase over these years. However, this trend reversed beyond this point, with total assets declining significantly from March 2022 onwards, dropping to around 2,450,000 thousand US dollars by the end of the data series in September 2022. This decline after a long period of asset growth suggests a major contraction or asset write-down during 2022.

Debt to Assets Ratio

The debt to assets ratio remained low and relatively stable at approximately 0.12 to 0.13 from early 2017 through the end of 2017. Starting in 2018, the ratio increased substantially, fluctuating between 0.34 and 0.56 from 2018 through 2020, indicating rising leverage but still within moderate bounds. From 2021, the ratio further increased, peaking at 0.98 by September 2022, implying that debt nearly equals total assets at that point. This rising ratio over time reflects an increasing reliance on debt financing relative to the company’s asset base, particularly notable in the sharp increase starting in late 2019 and culminating in 2022, which coincides with the decline in total assets seen in the same period.

Overall Analysis

The data suggests a period of aggressive expansion financed partially through accumulating debt starting around late 2019, followed by a reduction in asset base and increasing leverage in 2022. The near doubling of total debt and the rising debt to assets ratio indicate increasingly higher financial risk exposure. The drop in total assets in 2022 raises questions about asset disposals, impairments, or market value adjustments that merit further investigation to understand underlying causes and potential impacts on financial stability.

Total Assets

The total assets show a general upward trend from March 2017 through June 2022, increasing from approximately $531 million to a peak of about $3.83 billion in December 2021. This represents significant growth in assets over the analyzed period. However, a notable decline occurs after December 2021, with total assets decreasing to about $2.45 billion by September 2022, indicating a contraction or possible asset write-down or disposition during this more recent period.

Stockholders’ Equity (Deficit)

Stockholders’ equity also trends upward from March 2017 to its peak in December 2020 at roughly $742 million. Following this, equity fluctuates but remains relatively strong until the first quarter of 2022. However, a dramatic shift occurs in the last three quarters shown, with equity dropping sharply to a deficit position of approximately -$606 million by September 2022. This significant drop may suggest substantial losses, write-offs, or increased liabilities impacting the company’s net asset position adversely.

Financial Leverage

The financial leverage ratio generally increased over the timeframe. Initially, the ratio decreases moderately from 1.8 in early 2017 to approximately 1.53 by the end of 2017, reflecting reduced reliance on debt relative to equity. From 2018 onwards, a marked increase is observed, with ratios rising significantly into the 3 to 6 range in 2021 and 2022. The peak leverage ratio reaches around 6.56 in September 2021, indicating substantially higher leverage. This elevated leverage trend corresponds with the periods where equity fell and assets surged, implying increased debt levels or heavier financial obligations relative to equity. The incomplete data for June 2022 complicates precise interpretation, but the trend suggests sustained high leverage.

Overall Insights

The data demonstrates a period of substantial growth in total assets and equity through 2020, followed by increased financial risk as indicated by rising leverage from 2018 onwards. The surge in financial leverage coupled with the steep decline in equity in 2022 points to a period of financial strain. The decline in total assets alongside a shift to negative equity in 2022 may reflect operational challenges, restructuring, or material financial adjustments. Continuous monitoring of the company’s leverage and equity position is advised to assess ongoing financial stability.