Once a star of e-commerce, Etsy (ETSY) is now trading at a fraction of its 52-week high of over $300. The
e-commerce firm is not the only stock spiraling lower. Shopify (SHOP) fell after posting results. Amazon
(AMZN) sold off when it posted weak e-commerce sales.
eBay (EBAY) will likely face a slowdown, too. For example, eBay benefited from sellers profiting from
computer graphics cards asking for 300% of the MSRP. Those days are over as GPU supplies increase.
Why Etsy Fell
Etsy’s slowing business spooked investors. Revenue grew by 5.2% Y/Y to $579.27 million. Gross
merchandise sales rose by 3.5% Y/Y to $3.3 billion. But Etsy marketplace GMS of $2.8 billion is down 2%
Y/Y. The adjusted EBITDA margin of 27.5% is 600 basis points lower than last year.
In the second quarter, Etsy expects GMS of $2.9 billion to $3.2 billion. Revenue of $540M to $590M is
below the expected $627.28M. ETSY stock is in a sustained downtrend because markets are avoiding
expensive stocks. However, Etsy shares will always trade at a premium. Its business caters to sellers
offering unique products. Neither Amazon nor Shopify may offer the same service.
Your Takeaway
Etsy’s revenue grew below the rate of inflation. This is a potential concern. The firm needs to raise its
guidance and post better results to win back growth investors.
