Etsy Stock Rises on Revenue Beat Despite Earnings Shortfall

Etsy shares surged 6.8% Wednesday afternoon after the e-commerce platform reported second-quarter revenue of $672.7 million, surpassing analyst estimates of $647.6 million. The stock's rally occurred despite earnings per share of $0.25 missing the projected $0.49.

Gross merchandise sales declined 5% year-over-year, but revenue grew 4% through increased advertising sales. Profit margins contracted sharply to 4.3%, driving net income down 46% to $28.8 million. Buybacks partially offset the decline, with EPS falling 39%.

Investors appear focused on Etsy's resilient cash flow—$671 million generated over the past twelve months—rather than deteriorating GAAP earnings. The market's reaction suggests confidence in the platform's underlying monetization capabilities despite macroeconomic pressures on discretionary spending.