Etsy (ETSY) shares plummeted 5.16% in intraday trading on Wednesday following the release of its first-quarter 2025 earnings report. Despite beating revenue expectations, the e-commerce company's results were marred by a significant net loss and declining gross merchandise sales (GMS), causing investor concern.

The online marketplace operator reported revenue of $651.2 million for the quarter ended March 31, 2025, surpassing analyst estimates of $642.03 million and representing a 0.8% increase from the same period last year. However, Etsy posted a net loss of $52.1 million, or $0.49 per share, compared to a net income of $63 million, or $0.47 per share, in the year-ago period. The company's adjusted earnings per share of $0.46 missed the consensus estimate of $0.49.

Etsy's consolidated GMS fell 6.5% year-over-year to $2.8 billion, with the Etsy marketplace GMS declining 8.9% to $2.3 billion. The company attributed the top-line pressure to macroeconomic volatility. Looking ahead, Etsy expects second-quarter GMS to decline at a rate similar to or slightly better than the first quarter's performance, with an adjusted EBITDA margin of approximately 25%. This outlook, combined with the current quarter's results, appears to have dampened investor enthusiasm, leading to the sharp stock price decline.