Shares of Etsy (NASDAQ:ETSY) gained about 6.5% on Wednesday’s extended trading session after the company reported earnings for its fourth quarter of 2022. Revenues of $807.2 million increased 12.6% year-over-year and surpassed analysts’ estimates of $755.42 million. The top line benefited from higher transaction fees and Etsy Ads growth.
Etsy is an online marketplace that connects sellers with buyers. It is primarily used for selling vintage items, handmade goods, art, and crafts.
Despite the revenue beat, the company’s bottom-line scenario depicted a disappointing picture. Q4 earnings of $0.77 per share missed Street expectations of $0.80 and declined 30.6% year-over-year. This drop in net income was a result of higher marketing and product development expenses.
Moving on, Gross Merchandise Sales (GMS) were $4 billion in Q4, reflecting a decline of 4% year-over-year. Also, the company added 9.5 million new buyers, a nearly 6% drop from the prior-year period.
Coming to the Q1 outlook, Etsy anticipates revenues in the range of $600 million to $640 million, while GMS is expected to be in the range of $2.95 billion to $3.15 billion. The adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) margin is projected to be between 26% to 27% in the first quarter.
Is Etsy Stock Expected to Go Up?
As per TipRanks, ETSY stock‘s average price target of $141.30 implies 10% upside potential from the current levels. Overall, Wall Street is cautiously optimistic about Etsy with a Moderate Buy consensus rating based on seven Buys and four Holds. The stock has gained 13.1% so far in 2023.