Shares Of e-Commerce Company Etsy Jump Following Fourth Quarter Report

Shares of e-commerce company Etsy soared 18 percent in Thursday’s extended trading after the company reported fourth quarter earnings that beat analysts’ expectations.

Etsy reported earnings of $1.11 surpassing the 79 cents that a Refinitiv poll from analysts expected. Revenue for the fourth-quarter came in at $717 million. Analysts has forecasted revenue of $685 million for the quarter. The company also revealed that in the fourth quarter, it had 96.3 million active buyers on its platforms, higher than the 96.6 million that analysts expected for the quarter.

Although revenue surpassed analysts’ expectations, growth decline 16 percent YoY. Sales growth which stood at 100 percent in 2020, has also declined in the quarters that followed.

For guidance, Etsy says it expects revenue for the first quarter to range between $565 million and $590 million, lesser than Wall Street’s forecast of 4630 million. While analysts predict gross merchandise sales for the first quarter to be $3.5 billion, the company expects the value to range between $3.2 billion and $3.4 billion. Guidance for the first quarter doesn’t seem to bother investors as shares of the company soared.

According to Rachel Glaser – Etsy’s CFO, said that the guidance reflects the current realities, that compared to last year, gross merchandise sales were boosted by a pandemic-induced orders and increase in spending tied to government stimulus.

Companies like Etsy saw a boost in their operations thanks to the pandemic. People had to turn online for even the most basic needs as physical shopping drastically reduced and was discouraged due to social distancing. Even as things are gradually returning to “normal”, Etsy’s CFO believes that the company will be able to keep expanding its business operations in a post-pandemic world. “Even without the significant tail winds of stimulus checks and lockdowns, our first quarter 2022 guidance reflects our expectation that we will keep all of the gains made in 2021 — indicating our belief in the durability of the last two years’ growth. Furthermore, assuming stable macroeconomic conditions, we currently expect lower GMS growth year over year in the first half of 2022 and higher GMS growth in the second half, given the more challenging comparisons in the first half”, she said.

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