Etsy stock witnessed a decline on Wednesday as a result of concerns raised by an analyst about its near-term prospects, with consumer discretionary spending acting as a deterrent.
Goldman Sachs analyst Alexandra Steiger downgraded Etsy shares from Buy to Neutral and revised the price target for the stock from $84 to $80.
In October 2022, Steiger had initially given Etsy a Buy rating. However, since then, the stock has experienced a 31% drop, in contrast to the S&P 500’s 32% gain. Steiger attributed this underperformance to the negative impact of declining discretionary spending on Etsy’s financial performance.
Amidst a challenging consumer environment characterized by high inflation and interest rates, the online marketplace for individual sellers has taken measures to tackle the situation. On December 13, Etsy announced a reduction in its workforce by around 11%, equivalent to approximately 225 employees.
In a letter to staff, Chief Executive Josh Silverman acknowledged the difficulties faced due to the macroeconomic and competitive environment. He emphasized the need to generate more sales for sellers, which he identified as the most crucial aspect of their operations.
Steiger expresses concerns about Etsy’s ability to rebound in the short term, citing limited visibility and a wide range of possible outcomes for gross merchandise sales (GMS) growth in 2024. Despite multiple downward revisions to consensus expectations in recent months, Etsy’s revenue trends have remained subdued.
Etsy did not respond immediately to a request for comment. As of Wednesday, the stock was down 2.2%, trading at $75.10.