What Happened?

Shares of online marketplace Etsy (NASDAQ:ETSY) jumped 11.8% in the morning session after the company reported impressive third-quarter earnings, which beat analysts' revenue, EBITDA, and EPS expectations. The result highlights the ability to balance growth and profitability despite the observed pressure on the Etsy marketplace year-over-year GMS (gross merchandise sales). Overall, this was a good quarter.

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What The Market Is Telling Us

Etsy’s shares are quite volatile and have had 15 moves greater than 5% over the last year. But moves this big are rare even for Etsy and indicate this news significantly impacted the market’s perception of the business. 

The biggest move we wrote about over the last year was 6 months ago when the stock dropped 17.3% on the news that the company reported first quarter results. Its revenue growth regrettably slowed as its gross merchandise sales and active buyers fell short of analysts' estimates. That was slightly offset by the company's better-than-expected take rate, showing it charged higher commissions to offset its worse-than-expected demand. 

Etsy's management team noted that Q1 was a challenging environment for consumer discretionary products, which was a headwind to its growth. The company provided ambiguous guidance for the full year as well, spooking investors. Overall, this was a tough quarter for Etsy.

Etsy is down 35.5% since the beginning of the year, and at $52.28 per share, it is trading 39.9% below its 52-week high of $87.03 from December 2023. Investors who bought $1,000 worth of Etsy’s shares 5 years ago would now be looking at an investment worth $1,175.

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