After the online marketplace missed the FactSet consensus expectation for revenue due to a decline in gross sales on its platform, Etsy Inc.’s stock fell 9% on Wednesday, marking the worst decline in about a decade.
The business pointed to “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.”
According to Etsy (ETSY), its revenue for the fourth quarter increased 1.2% to $852.2 million. Although the amount is a record for the Brooklyn, New York-based business, it fell short of the $861.8 million analyst had predicted.
In terms of gross merchandise sales, which represent the total dollar worth of goods sold across all of Etsy’s marketplaces, the online crafts marketplace reported “significant” challenges.
In the fourth quarter, the company’s total gross product sales for all of its marketplaces dropped 6.8% to $3.7 billion.
Gross merchandise sales (GMS) on the Etsy marketplace fell 8.6% to $3.3 billion.
On Wednesday, Etsy’s stock price dropped $5.42, or 9.4%, to $51.87 per share. According to Dow Jones Market statistics, that’s the biggest percentage decline in the stock since it dropped 15% on May 2, 2024.
Josh Silverman, the CEO of Etsy, stated that the company is committed to improving the user experience “as we work to get back to GMS growth.”
Etsy outperformed analysts’ forecasts of 93 cents per share with a fourth-quarter profit of $1.03 per share. By repurchasing stock, the corporation has decreased the number of outstanding shares by 12.2 million.
The company said that its services division, which profited from advancements in its bidding algorithms on behalf of sellers, was partially responsible for its revenue rise.
Compared to the same quarter last year, when $27 million was spent on restructuring and other exit expenses, fourth-quarter net income climbed 56% to $129.9 million.
At 15.2%, the consolidated net income margin grew by 530 basis points.
Etsy’s stock was up 8.3% in 2025 ahead of Wednesday’s trade, compared to a 4.2% increase in the S&P 500 SPX.
