Etsy (ETSY) stock plummeted out of the gate Wednesday after the online marketplace beat profit expectations but came up short of revenue estimates for its fourth quarter.
In the three months ending December 31, Etsy's revenue increased 1.2% year over year to $852.2 million. Its earnings per share (EPS) rose 66.1% from the year-ago period to $1.03.
Etsy also said gross merchandise sales (GMS) decreased 6.8% to $3.7 billion, active sellers decreased 10% to 8.13 million and active buyers decreased 1.1% to 95.46 million compared to the year-ago period.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
"Despite facing significant gross merchandise sales headwinds in 2024, we are proud to have delivered year-over-year revenue growth and very strong profitability, while simultaneously investing in our future," said Etsy CEO Josh Silverman in a statement.
Silverman added that "foundational improvements" to Etsy's marketplace are "enhancing customer experiences," and he believes this "will further differentiate the Etsy experience, driving consideration and purchase frequency as we work to get back to GMS growth."
The company's headline results were mixed compared with analysts' expectations. Wall Street was anticipating revenue of $861.8 million and earnings of 93 cents per share, according to CNBC.
For its first quarter, Etsy said it expects GMS to decline at a rate similar to its performance in the fourth quarter.
"We see several factors that we believe should position the Etsy marketplace for improved GMS performance beyond the first quarter," said Chief Financial Officer Lanny Baker in a statement. "In addition, we're committed to maintaining a strong bottom line and generating healthy free cash flow, while also investing in the things which will further differentiate Etsy, build our opportunity, and drive our long-term growth."
Is ETSY stock a buy, sell or hold?
Etsy has lagged the broader market over the past 12 months, down 32% vs the S&P 500's 24% total return (price change plus dividends). And Wall Street remains on the sidelines when it comes to the consumer discretionary stock.
According to S&P Global Market Intelligence, the average analyst target price for ETSY is $62.86, representing implied upside of over 16% to current levels. This is likely the result of the share price falling faster than analysts' can keep up with vs expectations for a big rally. Meanwhile, the consensus recommendation on the mid-cap stock is a Hold.
Financial services firm Jefferies is one of those with a Hold rating on ETSY, along with a $54 price target.
"We could see gross merchandise sales growth accelerating in the second half of 2025 as a result of easier comparisons created by efforts to shift resources toward long-term improvements that have driven 'several points' of near-term headwinds to GMS, but could potentially yield benefits to frequency and buyer spend over time," says Jefferies analyst John Colantuoni.
Related Content
-
What's Next for Stocks After a Chaotic SpringA chaotic tariff policy buffets investors looking for clarity on the economy and inflation.
-
Think a Repeal of the Estate Tax Wouldn't Affect You? WrongThe wording of any law that repeals or otherwise changes the federal estate tax could have an impact on all of us. Here's what you need to know, courtesy of an estate planning and tax attorney.
-
In Your 50s? We Need to Talk About Long-Term CareMany people don't like thinking about long-term care, but most people will need it. This financial professional recommends planning for these costs as early as possible to avoid stress later.
-
Where to Invest in an Uncertain MarketIn an uncertain market, you can still pocket juicy payouts ranging from 4% to 14%, depending on risk.
-
My First $1 Million: Events Industry CEO, 65, Northern New JerseyEver wonder how someone who's made a million dollars or more did it? Kiplinger's My First $1 Million series uncovers the answers.
-
Social Security Pop Quiz: Are You Among the 89% of Americans Who'd Fail?Shockingly few people have any clue what their Social Security benefits could be. This financial adviser notes it's essential to understand that info and when it might be best to access your benefits.
-
Stock Market Today: Investors Look on the Bright SideA generally good week closes on another positive note, as investors, traders and speculators look for fresh catalysts.
-
My Three-Day Rule for Investing: And If it Applies NowStock Market I've seen a lot in my career. Here's what I see now in the stock market.
