Etsy (NASDAQ:ETSY) saw its stocks punished after Jefferies double-downgraded the online marketplace to underperform from buy. The firm cited the company’s need to spend more on marketing as buyer churn increases.
Analyst John Colantuoni and team warned that Etsy's heavier spending on marketing to slow down its churn rate is putting pressure on EBITDA.
"With more limited take rate upside and deteriorating buyer trends, we see downside to consensus from slowing top line and moderating margin expansion," he noted.
Jefferies assigned a lowered price target of $85 to Etsy vs. the 52-week trading range of $67.01 to $151.50.
In February, Etsy came out with its latest quarterly figures, showing revenue of $807.24M (+12.6% Y/Y) beats by $55.12 million. Consolidated GMS was $4.0 billion, down 4.0% year-over-year and down 0.7% on a currency neutral basis; Etsy marketplace reported GMS of $3.7 billion, down 3.5% year-over-year and up 145% on a three-year basis.
The company ended the year with $1.2 billion in cash and cash equivalents, short- and long-term investments. Under Etsy's stock repurchase program, during the quarter Etsy repurchased an aggregate of approximately $150 million, or 1,343,260 shares, of its common stock.
Shares of Etsy fell $2.87, or 2.5% in Thursday trading to $110.31.
