Shares of Etsy fell more than 9% in premarket trading on Wednesday after the e-commerce company announced that Chief Executive Josh Silverman will step down at the end of the year.
Silverman will be stepping down after steering the company for eight years.
He will be succeeded by Kruti Patel Goyal, Etsy’s current president and chief growth officer, who will also join the company’s board effective January 1.
“I’ve decided that this is the right time for me to hand over the leadership baton to the next generation,” Silverman said in a statement.
Silverman, a former eBay executive, guided Etsy through a period of rapid growth during the pandemic, when demand surged as consumers turned to online shopping and sellers pivoted to producing items such as face masks.
Earnings beat overshadowed by weak sales growth
The leadership announcement came alongside Etsy’s third-quarter earnings, which topped Wall Street expectations on both revenue and profit but revealed underlying weakness in sales volumes.
Etsy posted earnings of 63 cents per share, beating analysts’ consensus estimate of 52 cents tracked by FactSet.
Revenue came in at $678 million, above the $657.5 million expected.
“Etsy’s third quarter consolidated results surpassed expectations across all three of our key financial metrics — and GMS for Etsy and Depop combined returned to year-over-year growth,” said Silverman.
However, gross merchandise sales (GMS) — a key measure of the value of goods sold across its platforms — fell to $2.72 billion from $2.92 billion a year earlier, missing market expectations of $2.76 billion.
Etsy projected fourth-quarter GMS between $3.5 billion and $3.65 billion, with an adjusted EBITDA margin of about 24%, slightly below the 25.4% reported in the third quarter.
The company expects its take rate to remain steady at around 24.5%.
Competitive pressures weigh on user growth
Etsy’s user base has stagnated as it faces growing competition from Amazon, Shopify, and Chinese e-commerce upstarts Temu, Shein, and TikTok Shop.
Active buyers declined 5% year over year to 86.6 million, while active sellers fell 10.9% to 5.5 million, partly reflecting the impact of a seller set-up fee introduced in April.
Depop, Etsy’s fashion resale platform, continued to outperform, with US GMS growing 59% year on year and both active buyers and sellers rising sharply.
However, analysts warn that Etsy’s core marketplace remains under pressure.
Active buyers have trended downward for the past two years, with Q3 showing a 3.7% decline compared with 2023.
Etsy has struggled to attract new customers over the past two years, with active buyers stagnating at around 93 million.
Analysts note that such flat growth is concerning, given the secular expansion of internet usage, which suggests there are still untapped market opportunities.
To reignite momentum, Etsy may need to enhance the appeal of its existing offerings or introduce new products that resonate with a broader customer base.
Silverman’s departure comes as Etsy navigates shifting consumer habits and intensifying regulatory and trade headwinds.
President Donald Trump’s removal of the “de minimis” tariff exemption in August — which previously allowed shipments under $800 to enter the US duty-free — has added new costs for many Etsy sellers reliant on cross-border trade.
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