Etsy’s stock rose up to 18% in extended trading Thursday after the business disclosed better-than-expected fourth-quarter results. Stocks rallied late in the day after dropping earlier in the day on news of Russia’s invasion of Ukraine.
How did the company do?
Earnings: $1.11 versus 79 cents predicted by Refinitiv analysts
Revenue: $717 million versus $685 million expected
In the fourth quarter, Etsy reported 96.3 million active purchasers, compared to 95.6 million expected by analysts.
During the quarter, revenue growth slowed to 16%. Etsy sales grew 100% in 2020, but have slowed recently.
The online retailer predicts first-quarter revenue of $565 million to $590 million, versus $630 million expected by Wall Street. The quarter’s gross merchandise sales are expected to be between $3.2 and $3.4 billion, below the consensus forecast of $3.5 billion.
Despite the low forecasts, investors were unconcerned, focusing on the fourth-quarter earnings and sales performance.
Etsy CFO Rachel Glaser blamed the disappointing first-quarter GMS outlook on year-over-year comparisons, which included a pandemic-related surge in orders and government stimulus expenditure.
Etsy, Shopify, eBay, and Wayfair have all seen increased revenue during the coronavirus outbreak. To avoid spreading the infection, many consumers slowed their shopping visits and turned to internet stores for necessities.
Glaser believes Etsy, an online marketplace known for handmade and personalized goods, will be able to keep growing after the epidemic.
We intend to preserve all of the improvements obtained in 2021, even without the huge tailwinds of stimulus checks and lockdowns, Glaser said. The GMS growth rate is expected to be lower in the first half of 2022 and higher in the second half, assuming macroeconomic conditions remain constant.