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Week to date, shares of Etsy (ETSY 0.79%) were up 16% as of 11:25 a.m. on Friday, according to data provided by S&P Global Market Intelligence. The stock rose after bullish comments from an analyst whose data suggests that shoppers on Etsy will spend more on the platform this holiday season than they had previously planned to.
Etsy stock had lost more than half its value year to date through October on worries about slowing consumer spending. Expectations have gotten low for the company, and it didn’t help that it reported a 3.3% year-over-year decline in gross merchandise sales last quarter.
However, on Thursday, BTIG analyst Marvin Fong said that his firm’s post-Black Friday survey suggests shoppers are browsing the marketplace now more than they indicated they would be this season when they were surveyed in October. For what it’s worth, BTIG’s sample of more than 200 Etsy shoppers expects to spend 18% more on the site than they did last year.
While the analyst doesn’t expect a significant upside to current estimates, Fong noted that Etsy is “tracking well” relative to the company’s gross merchandise sales guidance for the fourth quarter.
The company predicted its gross merchandise sales in Q4 would land between $3.6 billion and $4 billion, which should translate to between $700 million and $780 million in revenue. It booked gross merchandise sales of $4.2 billion and revenue of $717 million in the year-ago quarter.
It’s unrealistic to expect Etsy’s sales will continue declining over the long term, so investors are starting to buy the stock before better news sends the price higher.
On that note, Adobe released a report that found overall online sales in the U.S. exceeded $9 billion on Black Friday, representing a 2.3% increase over last year. This is consistent with the BTIG analyst’s findings, and could signal that a turnaround is in store for Etsy.
John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Adobe and Etsy. The Motley Fool recommends the following options: long January 2024 $420 calls on Adobe and short January 2024 $430 calls on Adobe. The Motley Fool has a disclosure policy.
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