Why is Etsy (ETSY) Stock Up Today?
On Wednesday, shares of online marketplace Etsy Inc ETSY are popping after the company reported better than expected fourth quarter revenue yesterday, as well as provided guidance forecasts for the first time ever as a publicly traded company.
As of 12:05 PM EST, ETSY was up $0.59, or 7.98%, to $7.98.
Etsy reported $-0.04 per share in Q4, missing analyst estimates of a $-0.01. Its revenue of $87.9 million topped Wall Street estimates of $86.5 million.
The company is now expecting strong growth for revenue throughout 2016. It also forecasts gross margin to increase by 64%- 65%, and Adjusted EBITDA Margin to be up by 10%-11%.
Despite the positive performance, Wall Street still remains hesitant about Etsy’s prospects.
After Etsy reported, Darren Afthani of ROTH Capital Partners said that “We believe the stock may see a relief rally frombetter guided [gross margins]. However, decelerating growth in almost every metric…leaves our thesis unchanged, and us cautious on long-term guided operating leverage.”
Mr. Afthani maintained his “Sell” rating for Etsy as well as increased his 12-month price target for the company to $6.00 from $5.75.
“Even if management is content with the [return on investment] on this spend, this gap [between marketing and GMS] is unsustainable and growth rates will be tested as marketing spend diminishes as a percent of revenue in 2016,” said Gil Luria, an analyst at Wedbush Securities.
After Etsy reported its results, he kept his “Neutral” rating on the company and a $9.00 price target.
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