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Etsy is crashing

Screen Shot 2015 08 05 at 9.39.38 AM
Screen Shot 2015 08 05 at 9.39.38 AM

(Google) Near 9:40 a.m. ET.

Etsy on Tuesday evening reported a quarterly loss, and the stock is getting crushed.

In early trading on Wednesday, the stock fell 17% after sliding in after-hours trading on Tuesday.

The online marketplace for craft makers reported a second-quarter loss of $6.4 million, or $0.07 per share, ahead of the consensus estimate for a loss of $0.08 per share.

Revenues rose 44.4% year-over-year to $61.4 million, more than the estimate for $59.57 million, according to Bloomberg. This growth rate was the slowest the company has reported.

In the earnings release, Etsy said weaker foreign currencies continued to reduce demand for dollar-denominated products. As much as 9% of its gross merchandise sales (GMS) are from goods not listed in US dollars, the company said. Without the foreign-currency impact, GMS would have increased 26.5%, compared with the 24.6% growth witnessed.

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The company expects this currency hit to continue into the third quarter. It also plans to boost its staff and spend more on marketing, and these are expected to affect how it performs.

In the earnings release CEO Chad Dickerson said, "At the end of the second quarter of 2015, our loyal and engaged community included nearly 1.5 million active sellers and 21.7 million active buyers who drove more than $1 billion in GMS during the first half of the year."

Etsy's stock has been on the decline, and it is now down 46% from the April initial public offering.

In a note Wednesday, Morgan Stanley analysts lowered their price target on the stock to $16 from $19 and maintained their "equal weight" rating. They wrote that the number of active buyers came in lower than expected, which was disappointing given Etsy's increased ad spending.

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