Why are Etsy (ETSY) shares soaring today

What happened?

Shares of online marketplace Etsy (NYSE:ETSY) jumped 6.5% in the morning session after the company reported third-quarter results that beat Wall Street expectations, with revenue rising 10.9% year-over-year to $692.5 million. 

According to a company press release, Etsy reported GAAP profit of $1 per share and adjusted EBITDA of $210.4 million, with its operating margin expanding to 16.1% from 13.3% in the same quarter last year. Both figures comfortably exceeded Wall Street consensus estimates, which called for EPS of $0.74 and adjusted EBITDA of $195.9 million, while revenue topped expectations of $667.3 million. Marketplace gross merchandise sales rose 8.8% to $2.6 billion, supported by a take rate of 26.2% driven by improvements to Etsy Ads. The acceleration in gross merchandise volume alongside expanding profit margins and ad monetization reassured investors about the online marketplace's operating momentum.

After the initial pop, the shares cooled down to $91.22, up 4.2% from the previous close.

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What is the market telling us

Etsy’s shares are very volatile and have had 25 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 28 days ago when the stock gained 4.6% on the news that Payoneer renewed its partnership with the marketplace through 2029 to support international sellers. 

According to the company’s press release, the three-year renewal keeps Payoneer as a strategic payments partner for Etsy sellers across 16 markets in Asia, Europe, South America, and the Middle East. Eligible sellers can receive earnings in USD, withdraw to local bank accounts, and manage funds across more than 70 currencies via Payoneer on Etsy Payments. Extending cross-border payout infrastructure helps sustain international seller activity on the platform.

Etsy is up 59.3% since the beginning of the year, and at $91.22 per share, it has set a new 52-week high. Despite the year-to-date gain, investors who bought $1,000 worth of Etsy’s shares 5 years ago would now be looking at only $375.78.

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