ETSY - Etsy: More Trouble Could Be Ahead

2024-05-10 09:03:23 ET

Summary

• Etsy's shares dropped 20% after announcing lower-than-expected earnings and revenue.
• CEO attributes poor performance to pressure on consumer discretionary spending and removal of listings.
• Despite the large fall in price, there is still significant risk to be seen at the current share price given the lack of meaningful announcements to combat pressured consumer spending.

I believe that Etsy ( ETSY ) is overpriced and that a correction could occur within the next 12 months due to less than expected growth from gift mode, continued pressure in consumer discretionary spending, and increased competition from more affordable alternatives who will seek to take Etsy's market share as they actively ban millions of sellers from there platform, some unjustly.

Shares of Etsy were down roughly 20% in after-hours trading after the firm announced poor first-quarter results . To summarize, normalized EPS weighed in at $0.96 per share, short of analysts' consensus of $1.00 per share. Revenue also fell slightly below expectations at $646 million, compared to the Street's expectations of $647 million....

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