Etsy (NASDAQ:ETSY) stock rose about 3% during Wednesday’s extended trading session following the better-than-expected results for the first quarter of 2023. The company witnessed growth in its active buyer base. However, pressure on consumer spending persisted.
Etsy provides an online marketplace that connects sellers with buyers. It is primarily used for selling vintage items, handmade goods, art, and crafts.
Etsy’s Q1 earnings of $0.53 per share came above the Street’s expectations of $0.49 but declined 11.7% year-over-year. Further, Q1 revenues of $640.9 million increased 11% year-over-year and surpassed analysts’ estimates of $626.9 million.
The top line benefited from higher Marketplace revenue and transaction fee growth. Meanwhile, Services revenue rose 14% due to enhanced Etsy Ads products.
Moving on, Gross Merchandise Sales (GMS) were $3.1 billion, reflecting a decline of 4.6% year-over-year. The quarter witnessed lower demand for home and living, and craft supplies. Importantly, active buyers increased by 1% to 89.9 million, marking the first quarterly growth since the fourth quarter of 2021.
Regarding the Q2 outlook, Etsy anticipates revenues in the range of $590 million to $640 million, while GMS is expected to be in the range of $2.85 billion to $3.1 billion. The adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margin is projected to be 26% in the second quarter.
Is Etsy Stock Expected to Go Up?
At TipRanks, analysts are cautiously optimistic about ETSY stock. It has a Moderate Buy consensus rating based on 13 Buys, seven Holds, and one Sell. The average price target of $135.78 implies an upside potential of 37.2% from the current level.
To know the right time to buy and sell Etsy, investors can follow the stock’s most accurate analyst (on a one-year timeframe), Edward Yruma of Piper Sandler. Yruma has had a 78% success rate over the past year, with an average return of 59.39% per transaction.
It is worth mentioning that nine days ago, the analyst reiterated a Buy rating on ETSY stock. Although the consumer environment is still challenging, according to Yruma, the same is reflected in the stock’s valuation.