Etsy (NYSE:ETSY) snapped seven consecutive sessions of gains on Tuesday. It lost 1.03% to trade at $74.78.
The stock has been on an upward trajectory since October 20, when it closed 1.25% higher at $71.34. Between August 21 and August 29, the stock added nearly 6%, compared to a 2% rise in the broader markets.
The stock has entered the red territory ahead of its Q3 earnings on October 29, where analysts expect the company to report an EPS of $1.04 while revenue is set to see a marginal dip to $657.14 million.
Looking at Seeking Alpha’s quant rating, ETSY has been rated Hold with a score of 2.98 out of 5. The company has been graded A for profitability and momentum, but is dragged down by a D grade for growth and valuation.
Both Seeking Alpha and Wall Street analysts echoed similar sentiments and issued a Hold call for the stock.
In an article last month, Seeking Alpha analyst Kurt Christensen assigned a Hold rating to the stock on the back of continued user declines, pressured margins, and uncertainty about reigniting sustainable growth.
Christensen noted that the firm’s biggest concern is its shrinking platform, with active buyers declining 4.6%, repeat buyers decreasing by 4.7%, and new buyers dropping by a high rate of 14.5%.
“While the valuation looks good following the stock price drop, I am still going to stay on the sidelines. The company continues to see declines in users and GMS. Margins are getting pressure put on them as the company ramps up marketing and platform spends to try to bring on more users. My other concern is that the company is trying to squeeze too much out of the creators and is at risk of damaging the platform as a whole,” the analyst said.