It is a bad day for e-commerce companies. The Etsy (NASDAQ: ETSY) stock price collapsed by more than 19% after the company published a weak forward guidance. It dropped to a low of $91, which was the lowest level since June 2020. The stock has declined by more than 70% from its all-time high, bringing its total market cap to over $11 billion.
Etsy business slowdown
Etsy was one of the best performers during the pandemic as its two-sided marketplace saw robust growth. On the one hand, the number of sellers jumped sharply since more people were staying at home. This is an important metric since the company charges sellers a monthly fee. The number of sellers rose from 2.6 million in 2020 to over 5.5 million sellers in 2022.
On the other hand, the number of buyers rose sharply as most people turned to online shopping. The number of active buyers rose from 47 million to 90 million. The result was that the company’s revenue rose from $818 million in 2020 to over $1.7 billion in 2020. The revenue continued rising and reached $2.3 billion in 2021.
Now, the reverse is happening. The number of sellers is slowing down as people who signed up during the pandemic exit. Demand for the company’s products has also declined recently.
At the same time, Etsy has suffered as more sellers complain about its decision to hike fees. Recently, these sellers decided to strike for a while in a bid to protest the moves. The company is also struggling as the supply chain challenges continue.
The Etsy stock price is falling as investors react to the company’s earnings. Its revenue rose by just 5.755 in the first-quarter to $579 million. Its earnings-per-share trose to 92 cents. While these numbers were better than estimates, the company warned about the growth slowdown. The same is true for Shopify whose shares crashed by over 20%.
Etsy stock price forecast
The daily chart shows that the Etsy stock price has been in a strong bearish trend in the past few months. As a result, the stock has fallen below all moving averages. It has also managed to move below the important support level at $100 while the Relative Strength Index is close to its oversold level.
Therefore, there is a likelihood that the Etsy share price will keep falling in the near term as short-sellers target the key support at $70.
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