Etsy topped estimates for its third quarter earnings. Etsy stock wavered Thursday in response to a gloomy sales forecast for the fourth quarter, but shares recovered later in the day.
In earnings published late Wednesday, New York-based Etsy said it earned of 64 cents per share on sales of $636 million for the third quarter ended Sept. 30. That bested analysts expectations for an EPS of 50 cents on sales of $631 million, according to FactSet. Revenue climbed 7% year over year.
On the stock market today, Etsy stock closed up 1.6% at 61.63. Shares fell in after-market trading Wednesday and early Thursday before recovering.
Q4 Sales: 'Incredibly Challenging Environment'
For the current fourth quarter, Etsy projected its gross merchandise sales will decline in the "low-single-digit range" year over year. In the third quarter, GMS rose 1% to $2.7 billion.
"There's no doubt that this is an incredibly challenging environment for spending on consumer discretionary items," said Etsy Chief Executive Josh Silverman. "It's therefore important to acknowledge that this volatile macro climate will make it challenging for us to grow this quarter."
Silverman said the company is positioning itself to get "back to strong growth again as we move through this cycle."
Record Buyers
On the positive side, Etsy said it reached a record 92 million active buyers in the third quarter, up 4% from last year.
Further, the company said its total "habitual buyers" stayed steady from last quarter at 7 million.
UBS analyst Chris Kuntarich lowered the bank's price target for Etsy stock to 70, from 75, and maintained a neutral rating following the company's report.
"Discretionary spending headwinds and competitive pressures look more likely to outweigh search optimization and gifting awareness efforts near-term," Kuntarich wrote in a client note.
Etsy stock, an early pandemic winner, has lost nearly 50% of its value this year. And that was prior to the company's earnings release.
According to IBD Stock Checkup, Etsy has a Composite Rating of 45. The best growth stocks have scores above 90.