What Happened?
Shares of online marketplace Etsy (NASDAQ: ETSY) fell 4.1% in the morning session after the company announced its CEO of eight years, Josh Silverman, would step down, which was coupled with a weak forecast for the fourth quarter and a reported drop in active buyers.
The leadership change and disappointing outlook overshadowed third-quarter results that had surpassed Wall Street's expectations for revenue and profit. Investors focused on troubling trends, as the number of active buyers fell 3.7% compared to the previous year. Furthermore, Etsy projected a key profitability metric, its EBITDA margin, would be 24% for the fourth quarter, below analysts' expectations of 27%. The company also expected gross merchandise sales, a measure of all goods sold on the platform, to decline from the prior year. The news of the leadership transition, with Depop chief Kruti Patel Goyal set to take over in early 2026, added to investor uncertainty about the e-commerce platform's future.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Etsy? Access our full analysis report here.
What Is The Market Telling Us
Etsy’s shares are very volatile and have had 28 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 1 day ago when the stock dropped 8.8% on the news that its third-quarter earnings report revealed a drop in active buyers and a weak forecast for the fourth quarter. The company posted revenue of $678 million and GAAP earnings per share of $0.63, both surpassing expectations. However, investors focused on troubling trends, as the number of active buyers fell 3.7% year-over-year to 93.16 million. The key driver for the stock's decline was the company's disappointing guidance. Etsy projected an EBITDA margin of 24% for its fourth quarter, well below analysts’ expectations of 27%. This weaker outlook on future profitability appeared to overshadow the third-quarter beat, sending shares lower as investors weighed the company's near-term challenges.
Etsy is up 17% since the beginning of the year, but at $62.15 per share, it is still trading 17.8% below its 52-week high of $75.56 from October 2025. Investors who bought $1,000 worth of Etsy’s shares 5 years ago would now be looking at an investment worth $511.11.
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