KEY POINTS

  • Most analysts agree that there will be a significant drop in profitability for the third quarter.
  • The company will release their earnings this Wednesday afternoon.

What’s going on with Etsy stock

Yesterday, Etsy stock dropped by more than 4%. This comes days before it plans to release its latest earnings report. As of Monday’s market close, it appears that investors are not confident about what the results will show. The e-commerce platform stock’s was significant, especially when compared to a 0.8% decline in the S&P 500 (^GSPC) index.

Monday’s stock drop was powered by that broader market drawdown, but also by some specific worries about Etsy’s upcoming earnings report.

Why we care

The investors’ lack of confidence mirrors the opinions of analysts tracking  Etsy (NASDAQ:ETSY) stock. Of course, there are some bulls and bears mixed in with the analysts. However, on average, they expect the company’s generally accepted accounting principles (GAAP) per-share net profit will be $0.37 in the third quarter. This is significantly lower than the $0.62 it posted in the same quarter last year.

On the contrary, analysts anticipate that revenue will amount to more than $564 million. However, if accomplished, that would only equal growth of 6%. By comparison, in Etsy’s second quarter, the company managed to improve its revenue by nearly 11% year-over-year.

Due to current economic conditions, Etsy’s recent stock performance has caused some investors to lose confidence in the firm. In addition, inflation is reducing people’s purchasing power, and consumers are tightening their spending habits. Furthermore, many items available on the site might be considered frivolous

What now

Some may be concerned that consumers are less resilient than many assume. Despite that, Etsy still has a strong position in its niche and is one of the top destinations for those interested in crafts and collections. So, it’s very possible that investors are underestimating the company’s strength and potential at the moment.

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