Etsy Misses Wall Street’s Revenue Estimate as Marketplace Sales Dip

Etsy Inc. shares took a sharp hit on Wednesday, dropping 9%—marking their steepest decline in nearly ten months—after the online marketplace fell short of revenue expectations due to a decline in gross merchandise sales.

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The company pointed to several factors behind its weaker-than-expected performance, including reduced consumer spending on discretionary goods, tough comparisons to the previous year, a shorter holiday shopping season, and an increasingly competitive and promotional retail environment.

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Etsy reported a 1.2% rise in fourth-quarter revenue, reaching $852.2 million, which set a new record for the Brooklyn-based company. However, this result fell short of the $861.8 million analysts had anticipated, according to FactSet data.

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The platform also faced notable challenges in gross merchandise sales (GMS), which represent the total dollar value of all transactions across its various marketplaces. Etsy’s consolidated GMS declined 6.8% year over year, totaling $3.7 billion for the quarter. Meanwhile, sales specifically from the Etsy marketplace fell 8.6% to $3.3 billion.

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The company’s stock price dropped $5.42, or 9.4%, to $51.87 per share on Wednesday, marking its biggest single-day percentage decline since a 15% drop on May 2, 2024, according to Dow Jones Market Data.

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Despite the revenue miss, Etsy managed to exceed earnings expectations. The company reported a fourth-quarter profit of $1.03 per share, surpassing analysts’ projections of 93 cents per share. This improvement was partly due to a reduction in outstanding shares, as Etsy repurchased 12.2 million shares.

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Chief Executive Josh Silverman emphasized the company’s commitment to improving the customer experience as it works to restore growth in gross merchandise sales.

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A key driver of Etsy’s revenue growth was its services business, which benefited from enhancements in its bidding algorithms used to support sellers on the platform.

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In terms of profitability, Etsy posted a significant 56% jump in net income, reaching $129.9 million for the quarter. The prior-year quarter’s results had been impacted by $27 million in restructuring and other exit costs.

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The company’s consolidated net income margin also improved notably, rising by 530 basis points to 15.2%.

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Prior to Wednesday’s market decline, Etsy shares had climbed 8.3% in 2025, outperforming the broader S&P 500 index, which had gained 4.2% during the same period.

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