Etsy and Ebay Report Disappointing Q2 Outlooks

Shares of eBay and Etsy were dropping yesterday as Wall Street digested their first quarter results and their outlook for the second quarter.

The two companies reported after the bell on Wednesday and while they both reported better-than-expected first-quarter results, they also gave disappointing guidance for the current quarter.

The weak second-quarter guidance suggests a cooldown in the e-commerce sector and alarmed investors, as shares of eBay fell over 6% in extended trading and shares of Etsy sank 12%.

For the first quarter, ETSY reported earnings per share of 60 cents. This was in line with the 60 cents that was expected, per Refinitiv. Revenue at $579 million was above the $575 million expected, per Refinitiv.

eBay reported earnings per share of $1.05 adjusted, beating the $1.03 expected, according to Refinitiv. Revenues at $2.48 billion was slightly above the $2.46 billion expected.

Etsy saw its sales rise only 5.2% from a year ago, marking the first-time revenue grew in the single digits. Revenue at eBay fell 17.9% year-over-year to $2.48 billion. The company has said that it expects second-quarter revenue to come in between $540 million and $590 million, which is below the $628 million forecast by analysts, according to StreetAccount.

Gross merchandise sales during the quarter are projected to be in the range of $2.9 billion and $3.2 billion, while analysts forecast GMS of $3.4 billion, according to StreetAccount.

Etsy CEO Josh Silverman cited the disappointing guidance on tough pandemic era comparisons, but said he remains optimistic in the business’ potential for sustained growth over the long term.

“We are emerging from an unprecedented time — and within that Etsy had unprecedented growth,” Silverman said in a statement. “In a world of so many more choices, our guidance implies somewhere between a decline of low to high single digits for Etsy marketplace GMS year-over-year — retaining over 90% of the gains we have made over the past 2 years. Despite the near-term uncertainty, we have ample reason to remain very optimistic for the long-term.”

EBay projected second-quarter revenue to come in between $2.35 billion and $2.4 billion, implying a slowdown of 9% to 7% year over year. Wall Street projected second-quarter revenue of $2.54 billion, according to StreetAccount.

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.