Shopping for deep discounts can be risky business for investors. A sharp price decline often means Wall Street has reasons to be pessimistic about a company's growth and earnings prospects. These concerns are often short-term in nature, but they can reflect fundamental competitive and financial challenges that will expose your portfolio to unwelcome volatility.

Despite that risk, it's still worth looking at whether a sell-off has gone too far. Investors could see excellent returns from a beaten-down stock that's simply going through a rough patch, after all.

(NASDAQ: ETSY) might be in this exact position. The marketplace specialist's shares have been pummeled since reaching their highs in late 2021, potentially setting investors up for a big rebound ahead. Here are a few catalysts that could set the stage for that spike.

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Source Fool.com