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Etsy stock jumps on earnings double beat

Yahoo Finance Live anchors discuss stock performance for Etsy.

Video Transcript

JULIE HYMAN: Let's talk about some of those earnings movers. I know Etsy is one of those that we have been watching here. Etsy has really been hammered this year. It's, what, down something like 50% for the year thus far. Today, it's bouncing about 8 and 1/2% after earnings came in ahead of estimates. I mean, when you see that kind of a stock performance going into an earnings report, as I talked about earlier, the expectations are very poor, maybe even more poor than the sort of consensus estimates would tell you.

BRIAN SOZZI: It's another one of those wacky reactions to a report that wasn't very good. And what caught my attention was from CEO Josh Silverman on that call last night, acknowledging the level of discounting he's seeing in the industry. He actually mentioned Walmart's earnings warning from earlier in the week. But he said there's just a lot of discounting. And you have to think, well, what impact that is going to have on Etsy, continued impact as some of these quarters progress, because discounting, once it starts in retail, it just keeps going.

BRAD SMITH: Yeah, and just looking across some of the line items there, the revenue actually was higher year over year by about 11%. You also saw the marketplace revenue similarly just mirror in line with the broader revenue there. Services revenue was up.

And so, all of this really coming at a time where the consumer on their platform is looking at prices very consciously to decide as much as they want to support so many of the different sellers that Etsy would like to celebrate all of the time, it comes down to the pricing mechanisms that those sellers are having to work through and where they're actually seeing an impact of margins because they also know that there's going to be a cut that they're going to owe to Etsy because of those services that they provide as well at the end of the day.

JULIE HYMAN: Yeah, not everybody is super positive on this quarter. Lauren Schenk of Morgan Stanley stands out to me and says that the company is not modeling enough of a slowdown. Its forecast, by the way, for the current quarter was a little bit below what analysts have been looking for with revenue of, at most, $575 million. Analysts were looking for around $572 million. So there still are some cautious voices out there.

Schenk also says the growth outlook of the business is going to be materially different going forward than it has been. But other analysts like Ed Yruma over at Piper Sandler says it's still a good long-term growth story. So a little bit of a debate on this one.

BRIAN SOZZI: Good company, challenging macro environment.

JULIE HYMAN: Yeah.