Here's How Etsy Disappointed Investors Today

Core Insights - Etsy's Q4 2024 financial results disappointed investors, leading to an 8% drop in stock price due to struggles in user growth and retention [1] - Active buyers on the core Etsy platform decreased nearly 3% year-over-year to 89.6 million, contributing to a nearly 9% decline in gross merchandise sales (GMS) [2] - Despite a 1% increase in Q4 revenue to $852 million, driven by an improved take rate primarily from advertising, net income saw a significant 56$130 million [3] User Engagement Trends - The overall health of Etsy's business is reflected in the decline of active buyers by 1% and sellers by 10% across all platforms, raising concerns for potential investors [4] - CEO Josh Silverman emphasized the urgency to enhance buyer engagement and sales, but the outlook for Q1 2025 suggests similar performance to Q4, with expected sales drops offset by a better take rate [5] Valuation and Future Outlook - Etsy's stock is currently trading at approximately 20 times its earnings, which is considered fair given the declining engagement on its platform [6] - The company maintains a solid balance sheet and profitability, but without significant growth in 2025, the stock may face challenges in appreciating [6]