Is Etsy Stock a Buy After Its Post-Earnings Sell-Off?
Shares of Etsy (NASDAQ: ETSY) fell 14% following the release of its latest earnings report. And the stock has continued to fall since then. This is even as the company has continued to grow, with its active buyer count climbing by 3% to more than 96 million. Why are investors so down on Etsy's stock, and does its lower valuation make it an attractive time to invest in the online marketplace?
Earlier this month, Etsy reported its second-quarter earnings for the period ended June 30. Q2 sales of $628.9 million grew by 7.5% year over year. Its net income declined by 15% but that was largely a result of asset impairment charges, which added $68.1 million in expenses during the period that weren't there a year ago.
Impairment charges are nonrecurring, so the good news is that Etsy's bottom line should be able to bounce back from the dip in earnings. The more important issue relates to the company's growth. The items on Etsy's marketplace are generally more expensive than what users will find on eBay, particularly as Etsy's focus is on quality, handmade products. And while the company's growth was strong during the early stages of the pandemic, things have slowed down -- drastically.
Source Fool.com
