Etsy Inc. (Nasdaq: ETSY) reports Q3 2015 results Nov. 3 after the close, and investors are asking, "Should I buy Etsy stock now?"
Etsy stock is trading at $11.07, which is just above its all-time low of $10.29. The Etsy stock price has plunged since its highly anticipated initial public offering on April 16.
Etsy shares were priced at $16 a share, and the stock opened at $31. It quickly ran to $32 and finished its first day trading as a public company at $30. That was an 88% increase from the offer price. After the first day, Etsy was valued at $3.3 billion.
Yet in the two months following the IPO, the Etsy stock price tumbled 45.7%.
The company has also posted two consecutive steep quarterly earnings losses since going public.
In Q1, Etsy had revenue of $59 million, up 44.4% from $40.5 million in Q1 2014. Still, the company lost $0.84 per share as total operating expenses swelled 73% to $42.7 million over the same period.
The firm's financial woes continued in Q2. Etsy reported a loss of $6.4 million in Q2, or $0.07 per share. Total operating expenses were $43.2 million in Q2, up 49.3% year over year.
Etsy is now set to report Q3 earnings on Tuesday, Nov. 3.
Expectations are for a loss of $0.04 per share on revenue of $66 million. Traffic, which continued to grow for the first two months of the quarter, was likely fueled by even higher marketing spending.
Etsy has been uninspiring since it hit the market, but some investors are wondering if they should buy Etsy stock now that it's trading at such a low price. Here's what you need to know before you buy Etsy stock...
Should I Buy Etsy Stock at 52-Week Lows?
One of the biggest drawbacks to Etsy is its surging operating expenses. They rose 81.4% in 2013 and 67.6% in 2014. Etsy's expenses of $43.2 million in Q2 alone show the company continues to spend heavily.
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While some investors applaud Etsy for being a socially responsible company, that weighs on profitability. ETSY management puts shareholder and community welfare over Etsy stock's success.
You see, Etsy has a B Corp. certification...
The B Corp. status defines the company's mission. The certifications are awarded by B Lab, a nonprofit that, according to its website, "uses the power of business to solve social and environmental problems." B Corp. certifications are awarded to companies meeting various social, environmental, and accountability standards.
But these values threaten Etsy's ability to turn a profit.
Last Tuesday, Wedbush went from an "Underperform" to "Neutral" rating on Etsy stock. The firm said the slight upgrade comes as risks are more appropriately reflected in the Etsy share price.
But Wedbush kept its price target at $9. That's nearly 20% below where Etsy shares are currently trading.
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Related Articles:
- PR Newswire: Etsy to Announce Third Quarter 2015 Financial Results on November 3, 2015
- CNN Money: Etsy Now Worth Over $3 Billion, Stock Jumps 88% After IPO
- The Wall Street Journal: ETSY Stock