Etsy Stock Bashed After Earnings Report Deflates High Expectations

Etsy stock cratered Thursday, following its first-quarter earnings report that toppled estimates but provided an outlook below expectations.




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After the market close Wednesday, Etsy (ETSY) reported adjusted earnings of $1 a share on revenue of $550.6 million. Analysts expected earnings of 88 cents on revenue of $530.4 million.

Gross merchandise sales soared 132% to $3.1 billion, above the higher end of guidance. However, for its second quarter, Etsy expects a slowdown in the gross merchandise growth rate to a range of 5% to 15%. That would be $2.8 billion to $3.1 billion.

In addition, Etsy expects revenue growth in the range of 15% to 25%, or $493 million to $536 million. That compares with triple-digit growth in the previous four quarters. The midpoint of $514.5 million was below analyst estimates for $494 million.

Etsy stock plunged 14.6%, closing at 157.68 on the stock market today. Also, Etsy did not provide explicit guidance for the remainder of the year

Etsy provides an online e-commerce platform where creators of arts and crafts, vintage items and other unique goods go to sell their products.

Analyst Views On Etsy Stock

Oppenheimer analyst Jason Helfstein reduced his target price on Etsy stocks to 200, from 240. But he maintained a rating of outperform.

“We still see Etsy having a long runway of growth ahead, as they turn Covid-19 buyers into repeat customers and scale international business,” Helfstein wrote in a note to clients. “While investors were disappointed with guidance, Etsy has the ability to scale to materially higher levels.”

The company ended the quarter with 90.6 million active buyers, a leap of 90%.

Jefferies analyst John Colantuoni maintained a buy rating on Etsy and price target of 260. He believes the pullback in Etsy stock presented a buying opportunity.

“A large sequential slowdown in second-quarter GMS growth caused a knee-jerk reaction despite guidance falling within market expectations,” he wrote in his note to clients. “In addition, Etsy has a track record of beating guidance and is likely to experience accelerating growth in the back-half as comparisons ease.”

Please follow Brian Deagon on Twitter at @IBD_BDeagon for more on tech stocks, analysis and financial markets.

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