On Monday, Etsy stock rose 5% at 3 p.m. ET, outperforming the market’s gain of 2.6%. However, that improvement did nothing to reverse the e-commerce platform’s owners’ recent losses; their investment is still down by more than 50% in 2022, compared to a market-wide decrease of 23%.
Etsy’s stock price rose significantly on Monday as investors were more optimistic about the company’s near-term growth prospects, mainly due to the previous stock price drop.
What’s the Reason?
The market’s sudden upswing on Monday marked a reversal of the negative trend that had pushed prices significantly down for much of the year 2022. When investors began to fret that a recession was imminent, Etsy’s stock took a particularly harsh blow.
In late September, for example, shares fell by more than 6% on two occasions when the market was falling. Therefore, it is unsurprising that the Etsy stock price increased on Monday when investor optimism rose.
Etsy (NASDAQ:ETSY), too, is riding high as we go towards the Christmas buying season. Through the end of June, sales volumes on its platform were down significantly, although not as much as eBay’s. Etsy is continually growing its customer base. Although it is not profitable according to GAAP, its adjusted profit margin remains steady.
Investors will by the end of the year get one last critical report from management. Etsy’s (NASDAQ:ETSY) third-quarter operational results are expected to be released in early November. This report may serve as a barometer for the remainder of 2022.
Examine the changes in Etsy’s (NASDAQ:ETSY) customer base detailed in that report for clues as to whether or not the company will continue to expand its market share. Etsy stock has a great chance to make significant progress toward profitability in 2023 and beyond if it can keep up its excellent expansion, particularly in its overseas markets.
The price of Etsy stock fluctuates widely with investors’ expectations for the economy.
Featured Image – Unsplash © Ali Kazal