The reported earnings for Etsy Inc. (NASDAQ:ETSY) have not been good lately, and they are slated for further decline. According to an expected earnings report published Tuesday, the company had an EPS loss of $0.07 on revenue of $61.4 million. This is a significant difference from what experts expected the loss to be: $0.04 on revenue of $59.54 million.
Overall, the stock fell nearly 14 percent in this second quarterly earnings report, and the growth rate was approximately 4 percent lower than the growth rate the NASDAQ:ETSY reported in the first quarter.
The biggest concern associated with this report is that when the foreign exchange rates fluctuate, the earnings will continue to fall. Nine percent of Etsy’s sales come from outside of the country, and as the dollar continues to grow stronger, the company is worried that it will discourage that customer base.
Their earnings are still doing well, despite the lost stock. This quarter, the earnings were reported at more than $546 million, thanks to a recent influx of active sellers and buyers. However, company officials are concerned that the strengthened dollar will halt the growth of their company and even result in lost customers.
The demand for goods sold on the dollar is also significantly decreasing in international markets, and Etsy is not the only company that may suffer from the strengthened dollar.
Lost international revenue isn’t Etsy’s only competition either. Other major retailers are making moves to cut out their smaller competitors, Etsy included. Amazon, for example, is creating a new branch of their company called Handmade, which has a very similar interface as Etsy, but with all the customer perks that come with shopping on Amazon.
In response to both their falling customer base and Amazon’s attack on their niche, Etsy has a brand new marketing plan in the works. This strategy will be far more aggressive and seek to target both international and domestic customers. They are planning to mimic a lot of the benefits that Amazon is offering with their new shop, including things such as discounted shipping.
However, it might not be enough. Etsy is on the road to further decline, and if they lose their international customers and Amazon takes over their domestic clientele, Etsy’s stock will continue to fall.
Whether or not the collapse is imminent, it’s clear that the company needs to make some significant changes before the we see the next quarterly report from NASDAQ:ETSY.