By Sam Boughedda
Etsy (NASDAQ:ETSY) stock surged Thursday as investors reacted to the company's latest earnings release, which saw it top profit and revenue expectations.
Etsy shares rose more than 15% following the release after the close on Wednesday. It hit a high of over $101 per share on the news.
The e-commerce company reported third-quarter earnings of $0.58, $0.21 better than the analyst estimate of $0.37, with revenue for the period coming in at $594.5 million versus the consensus estimate of $562.56 million. The company's diluted loss per share was $(7.62), of which $(8.20) reflects an impairment charge of $1 billion in aggregate related to its acquisitions of Depop and Elo7.
The company's consolidated gross merchandise sales were $3 billion, down 3.3% year-over-year and up 0.7% on a currency-neutral basis. Etsy said the performance was impacted by macro headwinds, including reopening, pressures on consumer discretionary spending, foreign exchange rate volatility, and ongoing geopolitical events.
"We are pleased that Etsy's business has remained strong in a volatile environment and we believe our sustained performance is a testament to Etsy's unique position in e-commerce where, in a world of mass commodities supplied by companies obsessed with speed and scale, Etsy is the antidote," said Josh Silverman, Etsy's Chief Executive Officer.
Looking ahead, the company sees Q4 revenue between $700 million and $780 million, versus the consensus of $740 million. In addition, gross merchandise sales for Q4 are expected to be in the range of $3.6 billion to $4 billion.
Commenting on Etsy's earnings release, Needham & Company analysts told investors, "ETSY is starting to get past reopening headwinds, with 3-year GMS stack at core platform in 3Q22 seeing sequential improvement (all months performed roughly similarly) and October improving modestly (albeit October at 22% of sales is the smallest month of 4Q)."
Morgan Stanley told investors the firm has increased its price target on Etsy, albeit to $76 from $75 per share. It said the company's 4Q GMV outlook was "largely in-line with expectations with better margins driving '22 EBITDA dollar estimates slightly higher. However, the key debates on the stock - are '23 estimates still too high and what does normalized GMS growth look like - remain unanswered."