The shares of Etsy are plummeting during the early trading on Tuesday after reporting disappointing financial results for the second quarter.

Etsy logo

The stock price of the online marketplace for crafts and vintage products was down more than 22% to $14.95 per share at the time of this writing around 10:14 A.M. in New York.

Etsy second quarter financial results

Etsy reported a net loss of $6.4 million or $0.07 per share and revenue of $42.5 million in the second quarter. During the same period a year earlier, the company recorded a net loss of $3.2 million or $0.08 per share and revenue of $42.4 million.

Wall Street analysts expected Etsy to report a net loss of $4.1 million or $0.05 per share and revenue of $59.54 million for the second quarter based on data compiled by Thomson Reuters.

The company has approximately 1.5 million active sellers and 21.7 million active buyers by the end of the quarter. Etsy said its gross merchandise sales (GMS) increased 24.6% to $546.2 million, which was primarily driven by a 24.6% growth in active sellers and 31.6% growth in active buyers.

According to Etsy, the demand for dollar-denominated goods was affected by weaker local currencies in key international markets during the second quarter. Its GMS growth should have been 26.5% on a currency neutral basis.

In a statement, Etsy Chairman and CEO Chad Dickerson said, “We succeed when our sellers succeed, and we believe our reputation as an authentic, trusted marketplace is the foundation for the long-term value we expect to create for our entire community, including our investors, for decades to come.”

Etsy ended the quarter with $268.2 million cash and marketable securities including $194.1 million in net proceeds from its initial public offering (IPO).

Etsy warned that its GMS growth will remain negatively impacted if the currency exchange rate will stay at current levels in the third quarter.

Morgan Stanley cuts price target for Etsy

Analysts at Morgan Stanley maintained their Equal Weight rating for the shares of Etsy and lowered their price target from $19 to $16 per share. The analysts said the company’s number of active buyers missed expectations, which was disappointing given its increased spending in advertisements.

Prior to its IPO, Etsy warned in its filing that it may not achieve or maintain profitability in the future. The company had been confronting problems with counterfeit goods sold on its site.