Shares of Etsy (NASDAQ:ETSY) took a tumble in after-hours trading after the company’s Q3 guidance failed to impress. In the quarter that just wrapped up, the numbers were a mixed bag. While they snagged 6 million new buyers and bumped up active buyers by 3%, reaching an all-time high of 91 million, their consolidated GMS (Gross Merchandise Sales) was slightly down year-over-year. Active seller growth looked good, up 12.3%, but the GMS per active buyer fell by 6% in the Etsy marketplace.
On the revenue front, the company’s total for the quarter climbed 7.5% to $628.9 million, which beat expectations by $11.5 million, but that was a bit overshadowed by a 14% drop in net income to $61.9 million. Nevertheless, earnings per share came in at $0.45, beating expectations of $0.42. The CFO’s update carried a tone of optimism, highlighting strong adjusted EBITDA margins and two straight quarters of growth in active buyers.
But looking ahead, the projections were more subdued, with Q3 revenue and GMS expected to come in slightly below consensus. For reference, Etsy projected revenue between $610M and $645M, which contrasts with the consensus estimate of $633M, while forecasting GMS in the range of $2.95B to $3.10B, as opposed to the consensus figure of $3.07B. That’s probably the cold shower that sent the stock into a tailspin, a sign that, while there are encouraging signs, Etsy isn’t quite hitting the high notes some were hoping for.
Turning to Wall Street, analysts have a Moderate Buy consensus rating on ETSY stock based on 12 Buys, six Holds, and two Sells assigned in the past three months, as indicated by the graphic above. Furthermore, the average price target of $113.78 per share implies 18.43% upside potential.