Why Is Etsy (ETSY) Down 7.6% Since Last Earnings Report?

A month has gone by since the last earnings report for Etsy (ETSY). Shares have lost about 7.6% in that time frame, underperforming the S&P 500.Will the recent negative trend continue leading up to its next earnings release, or is Etsy due for a breakout? Well, first let's take a quick look at its most recent earnings report in order to get a better handle on the recent catalysts for Etsy, Inc. before we dive into how investors and analysts have reacted as of late.Etsy Q2 Earnings Miss Estimates, Revenues Jump Y/Y on Rising Ad SalesEtsy reported second-quarter 2025 earnings of 25 cents per share, which missed the Zacks Consensus Estimate by 53.7% and decreased 39% year over year. Second-quarter 2025 revenues increased 3.8% year over year to $672.7 million. The figure also exceeded the Zacks Consensus Estimate by 3.8%. The uptick was mainly driven by strong on-site advertising performance, with additional contributions from payments on both Depop and Etsy.Under its stock repurchase program, Etsy repurchased an aggregate of approximately $335 million or 6.4 million shares of its common stock in the second quarter of 2025.ETSY’s Top-Line DetailsMarketplace revenues were $468.2 million (69.6% of total revenues), down 0.5% from the year-ago quarter’s level. The dip was primarily caused by a 5.2% decline in transaction fee revenues, primarily attributable to lower GMS on Etsy. Reverb also contributed modestly to the decline due to its sale on June 2, 2025, while growth in GMS from Depop provided a partial offset.ETSY acquired 4.8 million new buyers in the quarter. The total number of active buyers on its marketplace was 87.3 million, which decreased 4.6% year over year.Services revenues were $204.5 million (30.4% of total revenues), up 15.3% on a year-over-year basis. The growth was primarily driven by an increase of 12.7% in on-site advertising revenues, led by a higher average price per click on Etsy Ads, with additional contribution from Depop's marketplace.ETSY’s Active User Base & GMS Decrease Y/YEtsy’s active buyer base decreased 3.4% from the prior-year quarter’s figure to 93.3 million. The figure missed the consensus mark of 94.6 million.The active seller base was 8.1 million, down 7.8% year over year. The figure also missed the consensus mark of 8.2 million.ETSY witnessed solid momentum in buyer reactivation. Reactivated buyers were a record 6.5 million, up 2.8% year over year.Consolidated GMS of $2.8 billion was down 4.8% on a reported basis and 5.8% on a currency-neutral basis from the prior-year quarter. The reported figure surpassed the Zacks Consensus Estimate by 1.23%.The Etsy marketplace’s GMS was $2.4 billion, down 5.4% year over year on a reported basis and 6.3% on a currency-neutral basis.ETSY’s Operating ResultsIn the second quarter of 2025, total operating expenses were $402.7 million, up 2.3% from the prior-year quarter. As a percentage of revenues, the figure contracted 90 basis points (bps) year over year to 59.9%.Marketing expenses increased 15.9% year over year to $212.1 million. As a percentage of revenues, marketing expenses expanded 330 bps year over year to 31.5%.Product development expenses decreased 2.3% year over year to $111.9 million. As a percentage of revenues, product development expenses are down by 100 bps year over year to 16.6%.General and administrative (G&A) expenses decreased 18% year over year to $78.7 million. As a percentage of revenues, G&A expenses decreased 310 bps to 11.7%.Adjusted EBITDA decreased 5.8% year over year to $169 million in the reported quarter. The adjusted EBITDA margin declined 260 bps on a year-over-year basis to 25.1%.ETSY reported an operating income of $76.4 million compared with $70.2 million in the prior-year quarter.ETSY’s Balance SheetAs of June 30, 2025, cash and cash equivalents totaled $1.2 billion, which increased from $649.2 million as of March 31, 2025.Short-term investments were $229 million, down from $218.5 million in the previous quarter.Long-term debt was $3 billion at the end of the second quarter, up from $2.3 billion reported at the end of the prior quarter.ETSY’s Q3 GuidanceFor the third quarter of 2025, Etsy anticipates the take rate to be 24.5%. Consolidated GMS is projected to be between $2.6 billion and $2.7 billion.The adjusted EBITDA margin is expected to be 25%.How Have Estimates Been Moving Since Then?In the past month, investors have witnessed a downward trend in fresh estimates.The consensus estimate has shifted -12.43% due to these changes.VGM ScoresCurrently, Etsy has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a score of B on the value side, putting it in the second quintile for this investment strategy.Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Etsy has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.Zacks Names #1 Semiconductor StockThis under-the-radar company specializes in semiconductor products that titans like NVIDIA don't build. It's uniquely positioned to take advantage of the next growth stage of this market. And it's just beginning to enter the spotlight, which is exactly where you want to be.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $971 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Etsy, Inc. (ETSY): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks