Etsy (ETSY) stock came under pressure on Wednesday after the e-commerce company posted weaker-than-expected holiday quarter sales as consumers shifted spending patterns and competition from PDD (PDD) and Amazon (AMZN) intensified. ETSY declined by as much as 8% in premarket trading ahead of the opening bell after it missed on the top line, though it beat on the bottom line.
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Quarterly revenue of $852.2 million grew 1.2% but came up short of analysts’ expectations of $862.8 million. And its key gross merchandise sales (GMS) figure fell 6.8% in the Fiscal fourth quarter to $3.7 billion. ETSY also guided for Q1 Fiscal 2025 gross merchandise sales to fall at a “similar” rate as in the quarter just gone.
CEO Josh Silverman said the company was “moving with urgency to increase buyer engagement, drive more sales, and return to GMS growth.”
Competition and Spending Patterns Weigh on ETSY
Etsy blamed the poor results on “pressure on consumer discretionary product spending, challenging year-over-year comparisons in a shortened holiday season, category mix, and a highly promotional and competitive retail environment.”
It came as online retailer Amazon in November launched a new outlet called Haul which caps the price of products on sale at $20, as it sought to take on low-cost retailers like PDD’s Temu and Shein.
Meanwhile, data from the U.S. Commerce Department’s Bureau of Economic Analysis pointed to consumers prioritizing essentials over items like gifts and furniture, among Etsy’s mainstays.
Nevertheless, Etsy’s fourth-quarter profit of $1.03 a share was ahead of the analyst estimate of $0.93 a share.
Is ETSY a Good Stock to Buy?
Overall, Wall Street has a Hold consensus rating on ETSY stock, based on three Buys, nine Holds and two Sells. The average analyst price for ETSY of $54.85 is liable to change following earnings.
