Etsy gets mixed analyst calls after plunging on earnings. Why two traders would steer clear

Etsy's stock has a difficult road ahead, according to two traders.

Shares of the e-commerce company are down 11% since Wednesday afternoon's earnings report, in which Etsy issued weaker-than-anticipated guidance that suggested online retail activity was slowing.

Dueling analyst calls accentuated the uncertainty around Etsy's future. Morgan Stanley upgraded Etsy on Thursday to equal weight on a better risk-reward profile and improved outlook for the company's recent acquisitions, while Roth Capital Partners downgraded it to neutral on an expected slowdown in growth.

With the stock still up around 468% from its March 2020 lows, there is likely more pain ahead, TradingAnalysis.com founder Todd Gordon told CNBC's "Trading Nation" on Thursday.

"The sell-off we've just seen seems young to me compared to that sell-off that began in early 2019 and ended at the Covid lows," he said, referencing a chart of the stock.

Gordon said the stock is "hanging on for dear life" above its 200-day moving average around the $175 level, but investors should get a chance to buy it lower.

Etsy shares fell fractionally Friday to $181.55.

"If we continue lower, you might look to scoop it maybe in the 130s, but … life online is slowing," Gordon said. "Revenues were up 100 million from last quarter, but their expenses were up 40% for marketing costs as they try to reengage existing users and bring in new ones. So I think try to maybe scoop it lower. I don't own it personally, though."

Etsy's potential headwinds could deter investors from buying the stock altogether, warned Boris Schlossberg, managing director of FX strategy at BK Asset Management.

Trading at a 52 times price-to-earnings multiple, the stock is very expensive and faces tough earnings comparisons going forward, he said in the same interview.

Throw in encroaching competition from Amazon Handmade and the fact that 60% of Etsy's customers only make one to two purchases a year, and the risk-reward trade-off isn't worth it at these levels, Schlossberg said.

"I find it to be, while having a tremendously loyal following, a very niche business that's extremely expensive at this point, and I kind of think the best is behind them right now," he said. "The stock's got to really come in much more to become a value proposition for investors to come in and start buying."

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