The stock price Etsy, the online marketplace for crafts and vintage products, dropped significantly after reporting weaker-than-expected financial results for the second quarter.
Etsy shares were trading $14.99 a piece, down by 22% at the time of this writing around 12: 42 in the afternoon in New York.
Etsy second quarter results disappoint investors
During the second quarter, Etsy posted a net loss of $6.4 million or $0.07 per share and sales of $42.5 million. The company failed to meet or exceed Wall Street analysts’ consensus estimate of $4.1 million or $0.05 per share in net loss and sales of $59.54 million.
Etsy reported a net loss of $3.2 million or $0.08 per share and sale of $42.4 million in the same quarter last year.
According to the company, its active sellers were 1.5 million and active buyers were 21.7 million by end of the quarter. Analysts at Morgan Stanley were disappointed with the number of its active users citing the reason that it did not meet expectations despite its increased spending in advertising.
Morgan Stanley reduced its price target for the Etsy stock to $16 from $19 per share. The equity research firm maintained its Equal Weight rating for the stock.
“We succeed when our sellers succeed, and we believe our reputation as an authentic, trusted marketplace is the foundation for the long-term value we expect to create for our entire community, including our investors, for decades to come,” said Etsy Chairman and CEO Etsy Chad Dickerson.
According to Etsy, its gross merchandise sales (GMS) grew 24.6% to $546.2 million in the second quarter. Its GMS growth should have been 26.5% on currency neutral basis.
The company explained that the demand for goods sold in U.S. dollar was negatively impacted by weaker local currencies in key international markets during the period. Etsy said its GMS growth will remain affected if the current exchange rate remains stays at its current level.
Etsy updates legal terms
Last month, Etsy updated its terms and policies to reflect the international nature of its business. The company introduced the House Rules section to help buyers and sellers find information regarding its legal terms & policies, their rights and responsibilities when using its service.
Etsy also made its terms and policies easy to understand and translated it in five additional languages including Dutch, German, French, Italian, and Spanish.