Etsy is trying to recreate pandemic-era sales. Here's where it's having trouble

Core Insights - Etsy is facing challenges with declining gross merchandise sales, a falling stock price, and high inflation while trying to meet the needs of its 7 million sellers [1][2] - The company's first-quarter results showed a decline in gross merchandise sales, flat consolidated marketplace revenue with only 0.8% year-over-year growth, and a net income drop from $74.5 million to $63 million [2] - The number of active users has increased by almost 70% since 2019, reaching 91.6 million active buyers, but purchase frequency has not kept pace [4] Financial Performance - Gross merchandise sales (GMS) fell in the first quarter, and the company's consolidated marketplace revenue was flat [2] - Year-over-year growth for consolidated marketplace revenue was only 0.8% [2] - Net income decreased from $74.5 million in the previous year to $63 million in the same quarter [2] Market Dynamics - The stock price peaked at an all-time high of $296.91 on November 24, 2021, following significant growth during the COVID pandemic, where GMS grew by 106.7% in 2020 and 31.2% in 2021 [3] - The increase in active users has not translated into sustained purchasing behavior, indicating potential issues with customer retention [4] Seller Challenges - Artisans have reported long-term changes in Etsy's culture, including higher transaction fees and requirements for advertising and customer service, which have impacted their sales [5] - Sellers feel they are receiving less profit from sales while facing increased demands to maintain their shops [6]