The shares of Etsy are trading lower due to allegations that it may have issued materially misleading information about its business. Etsy is a marketplace operator that connects people online and offline.
The stock price of Etsy plummeted almost 7% to $13.10 per share at the time of this writing around 1:30 in the afternoon in New York. The company lost more than 56% of stock value since its initial public offering (IPO).
The Electron Global Fund was up 2% for September, bringing its third-quarter return to -1.7% and its year-to-date return to 8.5%. Meanwhile, the MSCI World Utilities Index was down 7.2% for September, 1.7% for the third quarter and 3.3% year to date. The S&P 500 was down 4.8% for September, up 0.2% for the third Read More
Etsy started trading its stock on April 16. The initial public offering (IPO) price of its stock was $16 per share. The company’s stock price soared as much as $34 per share during its first day of trading.
Etsy had 1.4 million active sellers and 19.8 million active buyers by the end 2014 based on its regulatory filing with the Securities and Exchange Commission (SEC). Its gross sales were less than $2 billion last year.
Law firm investigates claims against Etsy
The law firm Finkelstein Thompson LLP is conducting an investigation on behalf of the shareholders of Etsy based on their allegations that the company released misleading information to the public.
Last month, it was reported that Etsy was probably experiencing counterfeit and infringement problems that impacted other e-commerce companies.
An analyst report suggested that as much as 2 million items on Etsy are probably counterfeit or constitute a trademark or copyright infringement. The stock price of Etsy declined significantly during the intraday trading on May, 11 based on the report.
Etsy price target reduced
Analysts at Wedbush recently reduced their price target for the shares of Etsy to $9 from $13 and reiterated their Underperform rating.
The analysts believed that the dilution of company’s brand due to the issues on counterfeit and mass manufactured products could restrict its revenue growth over the long-term.
They also reduced their FY16 EBITDA estimates for Etsy by 15% due to increased competition from competitors.
During the first quarter, the marketplace operator reported $58.5 million in revenues, higher than the $58 million expected by Wall Street analysts. The company posted losses of $0.82 per share.