Etsy stock tumbles on revenue miss, company reports drop in goods sold

Etsy missed on revenue and gross merchandise sales for the fourth quarter, with the company citing “significant headwinds,” including a pullback in consumer spending. The stock closed down 10% on Wednesday.

Here’s how the company did:

• Earnings: $1.03 per share adjusted vs. 93 cents per share expected by LSEG
• Revenue: $852.2 million vs. $862.8 million expected by LSEG

Gross merchandise sales, or the total volume of goods sold on the platform, came in at $3.74 billion, a decline of 6.8% year over year. Wall Street had forecast fourth-quarter GMS of $3.8 billion, according to analysts surveyed by FactSet.

The fourth quarter includes the holiday shopping period. Etsy said the GMS slump was a result of “pressure on consumer discretionary product spending,” tough comparisons due to the shortened holiday shopping season and “category mix,” as well as a competitive retail and marketing environment.

Etsy operates an online marketplace that connects buyers and sellers with mostly artisan and handcrafted goods. The company has been working to strengthen its image as a destination for unique gifts and products as it combats a fiercely competitive e-commerce market dominated by Amazon and, more recently, Chinese online retailers Temu, Shein and TikTok Shop.

Online holiday spending in November and December rose nearly 9% to $241.1 billion, topping analysts’ expectations of $240.8 billion, according to Adobe Analytics. Inflation-weary shoppers opened their wallets in search of deep discounts, but some discretionary categories like furniture, jewelry and accessories were expected to see some softness compared with toys and home decor products.

Revenue in the fourth quarter increased 1.2% to $852.2 million, compared to $842.3 million a year ago.

Net income for the fourth quarter came in at $129.9 million, or $1.17 per share, from $83.2 million, or 70 cents per share, a year ago.

Etsy also gave a downbeat outlook for the current quarter, saying it expects GMS will fall at a rate similar to the year-over-year performance it reported in the fourth quarter.

Etsy CEO Josh Silverman said on a call with investors that the company is taking a short-term hit to its GMS as it works to overhaul the site. The company has been focused less on “near-term conversion driving” in favor of improving the quality of goods and shopping experience on its site, Silverman said.

“While this resulted in real opportunity cost to GMS to the tune of at least a few hundred million dollars last year, we believe it will be well worth it as we’re now building on this improved foundation for 2025 and beyond,” Silverman told investors.

In recent years, Etsy has been working to counter the spread of mass-produced, generic goods from resellers on its platform to get back to its roots and keep shoppers returning to the platform. It’s also launched a gifting feature…