Etsy Inc. (ETSY: NASDAQ) Climbs Higher On Earnings News

Earnings season has been the most positive for some companies but for online craft-seller Etsy Inc. (ETSY: NASDAQ), the season couldn’t have produced better results. Following the closing bell on Tuesday, ETSY announced fourth quarter earnings. The numbers were appealing to investors after ETSY announced adjusted earnings per share of 15 cents. This was 6 cents better than the estimate offered by Reuters of 9 cents. The strong performance came on the back of revenues totaling $136.3M, a figure which beat Reuters estimate of $132.5M and which also grew by a solid 23.6% year over year.

But the biggest number, and perhaps the one investors reacted mostly to, was the gross merchandising sales (GMS). ETSY reported a fourth quarter GMS of more than $1B, the first time in the company’s history that it has crossed that mark in a single quarter. The $1B figure represents a 17.8% growth year over year and was part of another big positive for ETSY: active buyers and sellers grew by double digits, bettering the figures recorded for this metric over the corresponding period in 2016.

The strong numbers for ETSY translated well for investors in the afterhours. ETSY rallied +$3.13, reaching a high of $24.16 or +14.88%. This was a solid output for the extended tr5daing for a stock that didn’t do too well during the actual day’s trading. After battling a headwind for most of Tuesday’s session, ETSY closed down 0.43%. This represented a $0.09 decline which saw the stock finish regular hours trading at $21.03.

The strong fourth quarter sets the stage for a very exciting 2018 for ETSY. The company is getting stronger and stronger by the years and with more and more people flocking to the internet to sell stuff, ETSY could be well positioned to reap the benefits of adding more sellers which would in turn attract more buyers. There is also the interesting dynamic of eBay and its impact on the future growth prospects for ETSY. EBay recently ditched PayPal as its main payment processor, a move which many on Wall Street see as eBay becoming more aggressive as it looks to assert itself with competitors.

All in all it will be a very interesting year for ETSY. The stock has already surpassed the consensus one-year estimate of $19.41 and has also seen sharp increase in both its 20 DMA and DMA 200.

 

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