Online retailer Etsy (ETSY) traded nearly 10% lower on Wednesday following the company’s latest Q1 2025 earnings on Wednesday morning. The move puts Etsy shares in a position that forecasts another 10-20% loss in value over the next quarter.
For the quarter, Etsy reported mixed results that rattled Wall Street.
The company posted a loss of $0.49 per share, missing the FactSet consensus estimate of a $0.47 profit. That near $1-per-share earnings miss sent shares reeling, despite revenue slightly beating expectations at $651.2 million, up 0.8% year-over-year.
Investor’s big concern with the report – outside of the earnings per share loss - was Etsy’s Gross Merchandise Sales (GMS). The figure fell 6.5% from the prior year to $2.8 billion. Not adjusting for currency exchange, GMS declined 5.7%, showing continued pressure on consumer spending across its marketplace.
One reason for the wildly mixed results and earnings per share loss can be attributed to a $101.7 million charge from the sale of Reverb, Etsy’s music-focused marketplace.
Despite the disappointing bottom line, Etsy’s management struck an optimistic tone highlighting improving app engagement and personalization efforts. The company sees “Green shoots” emerging in Etsy’s application metrics driven by new AI and machine learning capabilities aimed at building deeper consumer connections.
While the company remains cautious about macroeconomic headwinds and tariff uncertainties, it believes its two-sided marketplace model and AI-powered user experience can provide long-term resilience.
Shares of Etsy have been trading in a long-term bear market trend since the end of the Pandemic in 2022. Prior to that, the company benefitted from the pandemic as most consumers shopped from their devices with traditional retain venues closed.
Today the stock is mired in an intermediate-term bear market trend as marked by its declining 50- and 200-day moving averages. The combination of long- and intermediate-term bearish trends suggests that long-term investors should expect to see even lower prices for the stock.
Shares aggressively bounced from round-numbered support at $40 in early April as the market reacted positively to the White House’s 90-day delay on tariffs. The stock followed through on that bounce to land at more than 25% for one day over $50.
That $50 level represents not only round-numbered resistance but also the site of Etsy’s bearish 50-day moving average. The double-barreled resistance reversed the short-term relief buying, putting the stock at risk of further declines.
Looking forward, investors should expect to see Etsy stock challenge the $40 – which should hold some short-term support – followed by a more aggressive move lower as consumers continue to tighten their spending.
Etsy shares remain in a long-term bear market with a price target of $30.
