The entire tech sector's been getting pummeled amid the broader bear market, but Etsy's stock has been among the hardest hit. Snap (SNAP), Netflix (NFLX), and Shopify (SHOP) are among the other companies that have seen massive declines amid inflation, the war in Ukraine, rising gas prices, and escalating interest rates.
Shares of Etsy, where crafters can sell their wares online, collapsed more than 65% year-to-date as of Monday, falling to about $72 ahead of the close of markets. It's the second-biggest decline in the S&P 500 this year after Netflix.
"Etsy's shares are falling due to anticipated rate hikes from the Fed on higher than expected inflation. Its declines are largely in-line with broader tech and e-commerce and not idiosyncratic to Etsy," said analyst Nick Jones of Citizens-owned JMP Securities.
The shift in the company's fortunes is stark. Etsy was a pandemic winner, seeing its online sales climb as e-commerce boomed amid shelter-in-place orders. In April 2020, handmade face masks flew off Etsy's virtual shelves.
Etsy's CEO said at the time that even non-mask sales were up 79% that month, CNBC reported. The Brooklyn, N.Y.-
based platform's stock simultaneously climbed, hitting its all-time high of $296.91 in November 2021.
However, the pandemic e-commerce boom has since slowed, a state of affairs made worse by inflation and corresponding concerns about consumer spending that have rattled both retail and tech. In February, Etsy announced an earnings beat that was tempered by lowered expectations for Q1.
The company's sales have slowed in the last few quarters. A year ago, the company's shares were at $170.30 but have declined more than 55% in the past 12 months.
Etsy's future isn't necessarily bleak. Jones is fundamentally bullish on Etsy as he believes there's substantial runway for the company to "continue attracting new active buyers globally given the robust categories it serves."
Those categories include jewelry, furniture, fashion, and beauty. It helps that the company's platform "is known for custom and unique products, while competing platforms are often known for CPG [consumer packaged goods] and used products," said Jones.
Additionally, he's optimistic about how the brand's building out its customer base and services. To that end, Etsy — which has 95 million listings — recently announced Etsy Purchase Protection, which will invest $25 million to cover refunds and missing or inaccurate items for sellers.
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"This year, Etsy has begun to focus on buyers who identify as men — historically females have been the focus demographic for Etsy," Jones said. "We think the company continues to be focused on generating the most relevant results for its users through technology enhancements; which, if successful, will improve conversion and attract more active and repeat buyers." : Yahoo Finance