Shares of Etsy (NASDAQ:ETSY) declined about 8% in yesterday’s after-hours trading. The fall comes after the company reported mixed fourth-quarter results and provided weak guidance. Despite higher Q4 revenues, the company’s bottom-line performance was negatively impacted by higher marketing expenses.
Etsy is an e-commerce platform that connects buyers with independent sellers globally.
Q4 Earnings Snapshot
The company’s Q4 earnings per share decreased over 19% year-over-year to $0.62 and missed analysts’ estimates of $0.77. Meanwhile, revenue increased 4.3% to $842.3 million, surpassing the consensus estimates of $827.8 million. The top-line growth was primarily driven by higher advertising and payment revenues.
Overall, Etsy’s gross merchandise sales (GMS) fell less than 1% to $4 billion in the fourth quarter due to macroeconomic challenges and intense competition in the retail industry. Excluding currency headwinds, GMS declined 1.6%. However, active buyers on the platform hit a new record of 92 million, up 3% year-over-year.
Q1 Outlook
For the first quarter of 2024, Etsy expects GMS to decline in the low-single-digit range year-over-year. Further, the adjusted EBITDA margin is expected to be around 26%.
Is Etsy a Buy, Sell, or Hold?
Following the release of Q1 earnings, Goldman Sachs analyst Alexandra Steiger reiterated a Hold rating on ETSY stock with a price target of $80 (3.7% upside).
Overall, Etsy stock has a Moderate Buy consensus rating, based on 10 Buy, eight Hold, and two Sell recommendations. The average stock price target of $82.58 implies 7.1% upside potential. Shares of the company have lost 40% over the past year.
