Etsy Stock Falls Sharply on Lower Guidance and Margins

Etsy reported third-quarter earnings after the market Wednesday that beat on revenue and matched estimates on earnings. However $ETSY lowered guidance and margins leading to analysts downgrading price targets sending the stock down over 15%.

Etsy reported third-quarter earnings after the market Wednesday that beat on revenue and matched estimates on earnings. However $ETSY lowered guidance and margins leading to analysts downgrading price targets sending the stock down over 15%.

ETSY

Etsy Inc NASDAQ: ETSY Q3 Earnings

Etsy Inc NASDAQ: ETSY Reported Earnings After Close Wednesday

$0.12 Met $0.12 EPS Forecast And $197.95 Million Beat $193.5 Mil Revenue Forecast

Earnings

Etsy reported adjusted earnings of 12 cents per share on revenue that jumped by 32% to $197.95 million. Wall Street had expected earnings of 12 cents on revenue of $193.5 million. Gross merchandise sales were up 30% to $41.2 billion, This is driven by growth in both Marketplace and Services revenue.

Etsy Inc NASDAQ: ETSY

Market Reaction: Close $44.49 USD −8.31 ($15.74%)

Highlights

  • Active buyers grew 21% year-over-year in the third quarter, and active sellers grew 27% year-over-year.
  • The marketing expense, specifically the investment in the TV campaign, drove operating expenses higher by 36%.

Outlook

  • Etsy lowered full-year guidance on earnings before interest, tax, depreciation and amortization, or EBITDA.
  • Margin guidance was lowered to a range of 22% to 23% from a prior view of 22% to 24%.
  • Etsy raised its full-year 2019 revenue guidance to a range of $809 million to $815 million from the previous range of $797 million to $809 million.
  • Gross merchandise sales are now anticipated to rise 25% to 26% to the range of $4.9 billion to $5 billion for the full year 2019.
  • Adjusted EBITDA margin forecast is narrowed to the range of $179 million to $187 million from the earlier range of $177 million to $193 million.

Analysts Lower Price Targets

  • Wedbush maintained its Outperform rating with a $66 target price, noting that the quarter had a lot of noise and that the efforts to make changes are in their very earliest stages.
  • Morgan Stanley reiterated its Equal Weight rating and lowered its target to $52 from $57.
  • KeyBanc Capital Markets maintained its Overweight rating but lowered its target price to $78 from $90.
  • Nomura/Instinet reiterated its Buy rating but lowered its target price from $70 to $61.

Source: Etsy

From The TradersCommunity Research Desk

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