Etsy Drops Despite Earnings Beat - What Wall Street Is Saying

Etsy reported revenue doubled and earnings topped analyst estimates, but the shares were down. Here's a sample of analysts' comments.
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Shares of online crafts retailer Etsy  (ETSY) - Get Report dropped Thursday despite the Brooklyn, N.Y., company's third-quarter-earnings beat. 

Etsy earned 70 cents a share in the quarter, compared with the consensus analyst estimate of 57 cents according to FactSet. 

Etsy reported revenue more than doubled to $451.5 million from $197.9 million. Analysts were expecting $412 million.

At last check Etsy shares were off 3.8% at $134.36.

Etsy Chief Executive Josh Silverman will be a guest on Jim Cramer's "Mad Money" program on CNBC Thursday evening. 

Here is a sample of what Wall Street is saying about Etsy.

Jefferies (Buy Rating Affirmed, PT $168 Raised From $167)

Etsy once again delivered an impressive beat and raise. In addition, a sequential acceleration in [gross merchandise sales] during October increases our confidence that [the] top line will continue delivering on high expectations. Bears will point to a sequential moderation in fourth-quarter Ebitda margin, but we think this is outweighed by impressive GMS trends. Our buy rating is supported by Etsy's position as a key beneficiary of changing consumer behavior.

- John Colantuoni 

Deutsche Bank (Buy Rating, $162 PT Affirmed) 

Third-quarter results beat Street estimates, which was expected based on third-party data. Etsy provided a conservative fourth-quarter guide as it pointed to consistent deceleration during the third quarter (partly due to lapping Reverb acquisition) – although October growth is in line with September – as well as uncertainty regarding covid, elections, lower mask sales in the fourth quarter (versus 11% of gross merchandise sales in the third quarter), [a] weaker macro outlook and, potentially, reduced consumer discretionary retail spend as travel restrictions ease.

- Kunal Madhukar

DA Davidson (Buy Rating Reiterated, PT $167 Raised From $160)

[The] shares may be under pressure on Thursday due to: 1) decelerating sales of masks and 2) elevated marketing spending in fourth-quarter 2020. We would take advantage of the pullback on the potential for upside to the fourth-quarter 2020 results and sustained benefits from covid-19 (increases in its: a) total addressable market, b) purchase frequency, and c) unaided awareness). [We] still see a high likelihood for Etsy to have a strategic competitive advantage during holiday when it comes to having gifts in stock, versus its e-commerce peers (most notably Amazon  (AMZN) - Get Report) because of the power of its seller-driven inventory model.

- Tom Forte

Canaccord Genuity (Buy Rating Unchanged, PT $170 Up From $160)

Etsy continued to deliver exceptional growth in the third quarter, with active buyers, sellers, gross merchandise sales, revenue, and adjusted Ebitda all coming in well ahead of expectations. Accelerating e-commerce adoption helped bring 14.8 million new and reactivated buyers to the marketplace, and ongoing platform improvements drove conversion rates higher, leading to 119% year-over-year GMS growth.

- Maria Ripps