Etsy Upgraded at Wolfe Research

On May 2, 2024, JMP Securities adjusted its outlook on Etsy (ETSY:NASDAQ), downgrading the stock to Market Perform. This change in stance was announced with Etsy's shares priced at $58.95. The downgrade by JMP Securities comes at a time when Etsy's stock has been under significant pressure, experiencing its lowest price since the onset of the Covid-19 stock market crash in early 2020. Despite trading above $300 in late 2021, the online retailer's shares have plummeted, particularly after its earnings report on Thursday. This downturn is attributed to a challenging consumer environment, as detailed by Renita Young. Further insights and details can be found in the coverage provided by the Schwab Network on YouTube.

Etsy's Financial Performance and Market Challenges

Etsy's recent financial performance has been less than stellar, with the company experiencing a significant drop in its stock price following a report of disappointing sales results for the first quarter. The online marketplace, known for its handmade and vintage products, saw its shares decline by 13.9% as of early afternoon. This downturn comes in the wake of flat revenue growth and a decrease in profits, marking a challenging period for Etsy, which had previously thrived during the pandemic. Despite the pandemic's peak being over two years ago, Etsy has struggled to achieve growth in the post-pandemic landscape.

The company's Gross Merchandise Sales (GMS), a critical measure of the total value of goods sold on the platform, decreased by 3.7% to $2.99 billion. This decline was partly due to the sale of Elo7, a Brazilian online marketplace Etsy had acquired a few years prior and sold last August. Revenue for the quarter saw a marginal increase of 0.8% to $646 million, barely meeting the estimates of $646.3 million. This slight revenue uptick is attributed to higher fees charged by the company. Furthermore, Etsy's active buyer base grew modestly by 0.9% to 96.4 million, while the number of active sellers on the platform saw a more substantial increase of 15% to 9.1 million. This disparity highlights the challenges Etsy faces in expanding its customer base in a competitive post-pandemic market.

Etsy's Stock Price and Market Capitalization

Etsy, Inc. (ETSY) experienced a significant drop in its stock price during Thursday morning trading, following the release of its quarterly earnings which did not meet expectations. The e-commerce retailer's shares fell by 14.4% to $59.69 around noon ET, marking a decrease of up to 19% earlier in the session, reaching its lowest intraday level in four years. This downturn came after the company announced its earnings after the market closed on Wednesday. Despite the number of active buyers on Etsy's platform increasing by nearly 2% compared to the first quarter of 2023, the gross merchandise sales (GMS) across the marketplace declined to $2.99 billion from the $3.10 billion reported in the previous year. Etsy's CEO, Josh Silverman, highlighted the company's operation within a "challenging environment," noting that consumers are increasingly opting for the least expensive options for many products.

ETSY's stock price is currently $59.28, experiencing a significant decrease of approximately 15%, with a change of -$10.46. Today, the stock fluctuated between a low of $56.6 and a high of $60.96. Over the past year, ETSY's stock has seen a high of $102.81 and has now reached its lowest at $56.6. The company's market capitalization stands at roughly $6.95 billion, with a trading volume of about 19.31 million shares on the NASDAQ exchange. This financial turbulence reflects the broader challenges faced by Etsy in maintaining its growth trajectory and adapting to the evolving consumer landscape, especially in a post-pandemic world where consumer spending habits have shifted significantly.

Etsy (NASDAQ:ETSY) saw its shares decline by more than 8% pre-market today, following the release of its fourth-quarter earnings which did not meet the expectations set by analysts.

The online marketplace reported earnings per share (EPS) of $0.62, falling short of the expected $0.77. However, its revenue reached $842.3 million, exceeding the forecast of $827.67 million.

For the upcoming first quarter of 2024, Etsy anticipates a slight year-over-year dip in Gross Merchandise Sales (GMS), projected to be in the low single-digit percentage range.

Additionally, the company estimates the take rate for the first quarter to range between 21% and 21.5%, with an expected adjusted EBITDA margin of about 26%.

Over the full year, Etsy is optimistic that revenue growth will outpace GMS growth. The anticipated full-year take rate is expected to be in line with or higher than the first quarter's projections.

Etsy (NASDAQ:ETSY) experienced a nearly 13% decline intra-day today after reporting Q2 earnings that fell short of expectations.

The company posted an EPS of 45 cents on revenue of $628.9 million. While the EPS exceeded the Street estimate of 42 cents, the revenue was slightly below the expected $618.6 million. The Gross Merchandise Value (GMV) for the quarter amounted to $3.01 billion, showing a decline of 0.6% year-over-year.

Despite the revenue and profit per share beating expectations, the GMV decrease caused concern among investors. However, Etsy's marketplace still achieved an all-time high in active buyers during the second quarter, which highlights the company's brand relevance and its ability to create opportunities for sellers.

Looking ahead to the current quarter, the company has provided guidance with a midpoint revenue projection of $627.5 million, which falls below the Street estimate of $632.4 million. Additionally, the GMV is projected to be $3.025 billion, again slightly below the Street's estimate of $3.07 billion.

Etsy (NASDAQ:ETSY) experienced a nearly 13% decline intra-day today after reporting Q2 earnings that fell short of expectations.

The company posted an EPS of 45 cents on revenue of $628.9 million. While the EPS exceeded the Street estimate of 42 cents, the revenue was slightly below the expected $618.6 million. The Gross Merchandise Value (GMV) for the quarter amounted to $3.01 billion, showing a decline of 0.6% year-over-year.

Despite the revenue and profit per share beating expectations, the GMV decrease caused concern among investors. However, Etsy's marketplace still achieved an all-time high in active buyers during the second quarter, which highlights the company's brand relevance and its ability to create opportunities for sellers.

Looking ahead to the current quarter, the company has provided guidance with a midpoint revenue projection of $627.5 million, which falls below the Street estimate of $632.4 million. Additionally, the GMV is projected to be $3.025 billion, again slightly below the Street's estimate of $3.07 billion.

Etsy (NASDAQ:ETSY) stock received an upgrade from Piper Sandler, who raised it to Overweight from Neutral and increased its price target to $140 from $135. This upgrade resulted in more than 3% gain intra-day today.

According to Piper Sandler, the company's active buyer growth is expected to "reaccelerate over the medium-term, powering continued share gains." Piper's 45th survey on Generation Z showed that Etsy is among the preferred websites for this particular group.

The firm believes that the core marketplace strengths of sustainability, intention, and personalization align well with the core values of Gen Z and millennials. With over 150 million SKUs and a significant focus on personalization, Etsy differentiates itself from other retailers and marketplaces. The firm also noted that Etsy has made significant progress in reactivating its 100 million lapsed buyers, which is expected to drive stronger active buyer results in the coming quarters.

Etsy, Inc. (NASDAQ:ETSY) shares closed more than 9% lower on Thursday following a price target cut by Oppenheimer analysts.

The analysts lowered their price target to $120 from $140 on weaker May conversion data but maintained their Outperform on the long-term market position.

The analysts said the regression of third-party data indicates weaker Q2 on lower conversion, noting a 4% decline in site visits (same as in Q1), but a 20% decline in outgoing payments traffic (vs. 5% year-over-year growth in Q1). As such, their regression model implies gross merchandise sales (GMS) 12% below the Street estimate and marketplace revenue 6% below the Street estimate.

Despite weaker 2022 GMS, Oppenheimer believes the company is maintaining its COVID-19 bump in active buyers and total spending, expecting organic GMS to decline 6% in 2022, but accelerate to a growth of 19% by 2024.

As inflation rates continue to rise, the analysts expect weaker consumer spending in the coming months but remain optimistic about the company's ability to remain an industry leader and attain market share.