stock was in free fall late Wednesday after the artisanal crafts e-tailer’s sales outlook eclipsed a solid second-quarter earnings report.
Etsy (ticker: ETSY) reported second-quarter earnings of 68 cents a share, beating Wall Street expectations for 63 cents. Sales came in at $529 million, just topping analyst projections for $525 million. The company posted $3 billion in consolidated gross merchandise sales, within management’s guidance for $2.8 billion to $3.1 billion.
Additionally, active sellers increased by 67% in the quarter, and active buyers increased by 50.1% compared with the same period last year. Gross merchandise sales per active buyer also grew 22% year over year.
Still, Etsy stock nosedived 14.5% in after-hours trading to $172.85.
What likely has investors concerned is that Etsy’s third-quarter guidance suggests the company may cede ground as the economy reopens. Management is forecasting revenue between $500 million and $525 million for the September quarter, falling short of analyst estimates for $528 million in sales for the period. Etsy again didn’t provide full-year guidance.
In addition, beating analyst expectations might no longer be enough for e-commerce companies to keep investors satisfied.
Heading into earnings, analysts had high expectations for Etsy, projecting revenue and earnings figures that were on the high end of management’s guidance. While Etsy surpassed analysts’ benchmarks and posted numbers within its own guidance, investors appear to be reassessing the growth potential of e-commerce, especially after the surge in online spending during the Covid-19 pandemic. It also remains to be seen whether the economic reopening will allow bricks-and-mortar retailers to claw back consumer spending that otherwise would have gone online.
Across the board, shares of e-commerce companies have been taking a hit, despite better-than-expected earnings. Just last week, Just last week, Amazon.com (AMZN) beat earnings estimates, but sales came in slightly short of analyst forecasts for the e-commerce giant’s latest quarter. That prompted investors to wipe 7.4% off the company’s market capitalization in after-hours trading in the wake of the report.
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