Etsy Stock Plummets After Weak Consumer Spending Hurts Q4 Revenues: Retail Sentiment Sours

Shares of Etsy Inc. (ETSY) dived more than 10% drop on Wednesday after the crafts retailer’s fourth-quarter revenue and gross merchandise sales fell short of Wall Street estimates, dampening retail sentiment.

Its revenue stood at $852.16 million, missing Wall Street estimates of $861.58 million. Earnings per share stood at $1.03, surpassing estimates of $0.92, according to Stocktwits data.

Etsy’s Q4 gross merchandise sales declined 6.8% year-over-year to $3.7 billion, driven by weak spending on handcrafted items and gifts. The figure was below Wall Street expectations of GMS of $3.8 billion.

Etsy marketplace GMS came in at $3.3 billion, down 8.6% year-over-year,  a decline the company attributed to weak consumer discretionary product spending, challenging year-over-year comparisons in a shortened holiday season, category mix, and a highly competitive retail environment.

"Despite facing significant GMS headwinds in 2024, we are proud to have delivered year-over-year revenue growth and very strong profitability, while simultaneously investing in our future," said Josh Silverman, Etsy’s CEO.

Silverman added the company continues to focus on enhancing its customer experience that will help “further differentiate” the brand and drive “consideration and purchase frequency as we work to get back to GMS growth."

Etsy expects its consolidated first quarter 2025 GMS will decline at a rate similar to the year-over-year performance reported for the fourth quarter of 2024.

Sentiment on Stocktwits slipped to ‘extremely bearish’ from ‘extremely bullish.’ Message volumes climbed to ‘extremely high’ from ‘high.’

One user on Stocktwits lamented how the stock resembled a ‘bubble.’

Etsy had $1.2 billion in cash and cash equivalents, short- and long-term investments at the end of 2024.

During the fourth quarter, Etsy repurchased an aggregate of about $260 million, or 4.9 million shares, of its common stock under its stock repurchase program.

Etsy stock is down 2% year-to-date.

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