Etsy (NASDAQ:ETSY) investors should exercise caution before the e-commerce company reports its third-quarter 2023 financial results on November 1 as macro and competitive pressures could create downside risk, according to Wedbush analysts.
In an update to clients, they also noted that greater risk exists for Etsy (NASDAQ:ETSY)’s 3Q consolidated Gross Merchandise Sales (GMS) guidance and the analysts have negative view on the traffic and average order value (AOV) benefits from a new company-funded promotion in September.
As well, analysts at Wedbush believe Etsy’s stock price performance could be impacted by factors such as the restart of Federal student loan payments in October, exhausted excess pandemic savings, rising interest rates that could take another bite out of consumer discretionary spending, and declines in US and UK consumer confidence.
They also see continued pressure on the company’s gross margins from refunds associated with Etsy’s purchase protection program introduced last fall, in addition to plans to increase purchase protection on orders during the holidays.
"Overall, we like ETSY’s longer-term growth opportunities in the US and abroad, and believe its unique marketplace is difficult to replicate, but near-term risks lead us to maintain our ‘Neutral’ rating and $70 target price," the analysts wrote.
Etsy’s e-commerce platform is focused on handmade or vintage items and craft supplies.
Shares of Etsy rose 1.3% to $65 in late-afternoon trading on Tuesday but have plunged 43% year to date.
Contact Sean at sean@proactiveinvestors.com