Goldman reportedly said Etsy’s sales declines have sustained longer than expected, and visibility on a consistent return to positive growth is low.
Goldman Sachs has reportedly downgraded shares of e-commerce firm Etsy Inc to ‘Sell’ from ‘Neutral,’ while reducing the price target to $45 from $70.
The brokerage anticipates risk to Wall Street estimates given low visibility on gross merchandise sales, the potential for Etsy’s share losses to persist over time, and the possibility of margin compression next year compared to a margin expansion expected by analysts.
Goldman reportedly said Etsy’s sales declines have sustained longer than expected, and visibility on a consistent return to positive growth is low. The brokerage expects that Etsy Marketplace will continue to lose market share of overall global e-commerce sales in the upcoming years.
“Street Adj. EBITDA estimates could be revised lower if GMS declines continue for longer than expected or if ETSY steps up growth investments,” Goldman reportedly said.
Following the announcement, retail sentiment on Stocktwits dipped into the ‘neutral’ territory (52/100) from the ‘bullish’ zone, accompanied by high retail chatter.
Even as Etsy’s stock has already lost nearly 39% on a year-to-date basis, the brokerage has cautioned it sees an unfavorable risk/reward due to the risk of further negative revisions to medium-term consensus estimates.
Stocktwits users with a bearish view on the firm have expressed concerns over intense competition from e-commerce giants like Amazon.
Etsy shares declined over 4% in Tuesday’s pre-market session and the stock is currently trading near its four-and-a-half year lows.
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