Shares of Etsy (NASDAQ:ETSY) stock are in the green this morning after the company reported fourth-quarter earnings. The e-commerce platform crushed earnings per share (EPS) expectations of 79 cents, reporting a beat of $1.11. Furthermore, revenue came in at $717 million, which was above analyst expectations of $685 million. The revenue figure demonstrated year-over-year (YOY) growth of 16%. However, Etsy’s management team warned that tough comparisons with the YOY period may show declining growth.
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In addition, the Brooklyn-based company reported Q1 revenue guidance to come between $565 million and $590 million. Analysts have expected $630 million. Adding on to the missed expectations is Q1 gross merchandise sales (GMS) guidance. The analyst consensus estimate is $3.5 billion; Etsy projected Q1 GMS to be between $3.2 billion and $3.4 billion. These two statistics may be dragging ETSY stock down, as it opened higher by nearly 15% and is now higher by around 12%.
CFO Rachel Glaser commented on the company’s GMS outlook:
“[A]ssuming stable macroeconomic conditions, we currently expect lower GMS growth year over year in the first half of 2022 and higher GMS growth in the second half, given the more challenging comparisons in the first half.”
With those challenging comparisons in mind, let’s pivot and see how Wall Street feels about ETSY stock.
3 Analysts Weigh In on ETSY Stock Price Predictions
- Needham has a price target of $325. Analyst Anna Andreeva chose Etsy as her “Top Pick for 2022.” Andreeva believes Etsy will be able to sustain double-digit GMS growth for the “foreseeable future.” Furthermore, the analyst believes the recent decline from the highs and multiple compression slates ETSY stock at an attractive entry point.
- UBS has a price target of $215. Analyst Kunal Madhukar has a “sell” rating and lists several reasons for this. First, Etsy operates in a “niche” total addressable market (TAM) of which it already has 10% market share. While the company has been able to capitalize off Covid momentum, the analyst notes that “active buyer growth has stalled.” That slowdown in active buyer growth could potentially warrant multiple compression.
- Finally, KeyBanc has a price target of $200 for ETSY stock. Analyst Edward Yruma believes that Etsy’s acquisition of Depop will allow it to increase its TAM. Additionally, Yruma was impressed with the Q4 results, adding that Etsy plans increase its base take rate from 5% to 6.5% by April. The analyst ultimately believes that “greater purchase frequency is key to driving long-term growth.”
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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