Etsy's Growth Surge Hides an Ugly Secret -- Should You Sell The Stock?

This year has been particularly difficult for digital retailers. Slowing growth caused by the pandemic hangover, 40-year-high inflation, and the onset of a bear market have created an increasingly difficult environment for e-commerce companies and Etsy (NASDAQ: ETSY) was not immune to these conditions.

The seller of handmade and vintage goods got a considerable lift during the pandemic, as shopping from home soared and demand for handmade face masks surged. In recent months, however, the company has faced the one-two punch of tough comps and slowing sales, which have dragged its stock down as much as 68% from highs reached late last year.

When Etsy reported its second-quarter financial results after the market close on Wednesday, the results appear promising at first glance and investors cheered the stock up 10% on Thursday. But there's a problem hiding just beneath the surface.

Source Fool.com