Tag Archives: Shares
FILE PHOTO: The Alcatel Lucent logo is seen in Calais, France, September 7, 2016. REUTERS/Charles Platiau
HELSINKI (Reuters) – Finnish network equipment maker Nokia said on Friday it was looking into transactions at its former French rival Alcatel-Lucent which it acquired in 2016, after reporting possible compliance issues at the unit to U.S. authorities.
Shares were down 8.2 percent by 1127 GMT, on track for worst day since October 2017 and bottom of the pan-European STOXX 600 index.
“The last night comment on possible fines stemming from business transactions of Alcatel-Lucent is hurting the stock, the market is really sensitive about Nokia these days,” said Kimmo Stenvall, analyst at OP Markets.
Nokia said certain practices relating to compliance issues at the former Alcatel-Lucent business had raised its concerns during the integration process.
“To ensure complete compliance we are now scrutinizing certain transactions in the former Alcatel-Lucent business and although this investigation is in a relatively early stage, out of an abundance of caution and in the spirit of transparency, Nokia has contacted the relevant regulatory authorities regarding this review,” Nokia said in an emailed statement to Reuters.
Nokia said it had voluntarily reported the matter to the relevant regulators, and it was cooperating with the authorities to resolve the matter.
“The resolution of this matter could result in potential criminal or civil penalties, including the possibility of monetary fines, which could have a material adverse effect on our business, brand, reputation or financial position,” it said in a filing to the U.S. Securities and Exchange Commission.
Reporting by Anne Kauranen and Tarmo Virki, editing by Louise Heavens
SEOUL (Reuters) – Shares of South Korean chip giants jumped on Thursday after U.S. chipmaker Micron Technology Inc forecast recovery in a memory market saddled with oversupply as device demand sags.
FILE PHOTO: Memory chip parts of U.S. memory chip maker MicronTechnology are pictured at their booth at an industrial fair in Frankfurt, Germany, July 14, 2015. REUTERS/Kai Pfaffenbach
The world’s second-biggest memory chip maker, SK Hynix Inc, saw its shares surge nearly 7 percent by 0330 GMT, while technology giant Samsung Electronics Co Ltd gained 4.3 percent.
Micron said on Wednesday it saw recovery in the memory chip market, after reporting quarterly profit that beat analyst estimates as cost control helped offset falling demand and prices.
“Micron’s projection on growing memory chip demand from data center operators set up a positive outlook for the memory chip industry, helping boost shares of South Korean chipmakers,” said analyst Seo Sang-young at Kiwoom Securities.
Analysts have been wary about prospects of the memory chip market due to lower demand for smartphones and slumping investment from data center companies.
“With its plan to cut production, it seems that Micron is determined to better control oversupply problems in the chip market,” said analyst Park Sung-soon at BNK Securities.
Tech research firm TrendForce in a report on Wednesday said it expects a only a slight decline in NAND flash chip sales in the second quarter as demand recovers from smartphones, computers and servers.
“Although it won’t cause an immediate reversal of the oversupply situation, it will have a positive effect on the market environment,” analyst Ben Yeh at DRAMeXchange, a Trendforce division, said in the report.
Both Samsung Electronics and SK Hynix said in their earnings conference calls in January that they expected sales of memory products to revive in the second half of the year.
Rising chip shares helped lift the broader KOSPI stock price index by 0.3 percent.
Reporting by Heekyong Yang; Editing by Christopher Cushing
(Reuters) – U.S. chipmaker Micron Technology Inc on Wednesday said it sees a recovery in the memory chip market coming and reported a quarterly profit that beat estimates as cost controls helped offset falling demand and prices, sending its shares up nearly 5 percent.
The logo of U.S. memory chip maker MicronTechnology is pictured at their booth at an industrial fair in Frankfurt, Germany, July 14, 2015. REUTERS/Kai Pfaffenbach
Micron makes NAND storage chips that are used in phones and internet servers as well as DRAM chips that help computer processors communicate with those storage chips.
The company beat revenue expectations for the fiscal second quarter ended Feb. 28. Although it gave a forecast for its fiscal third quarter that was below Wall Street’s expectations, Micron said demand is likely to begin growing again by its fourth quarter.
The results come against the backdrop of a glut in the global semiconductor industry triggered by waning demand for smartphones and spotty purchasing patterns by cloud-computing vendors, which hurt chipmakers such as Intel Corp earlier this year.
Meantime, Micron trimmed its spending plans and said it had idled some factory lines to bring its chip output in line with lower demand, helping keep profits flowing and a share buyback plan on track.
For its fiscal second quarter, Micron generated nearly $ 1 billion in free cash flow and a profit of $ 1.71 per share, excluding items. That was down from $ 2.82 a year earlier but above Wall Street expectations of $ 1.67, according to IBES data from Refinitiv.
“Certainly Micron has not been in a situation before where it’s been able to deliver such healthy profitability and cash flow in an adverse industry environment,” Chief Executive Sanjay Mehrotra said in an interview with Reuters.
Kinngai Chan, an analyst with Summit Insights Group, said investors were focusing on the outlook for a recovery in the second half of the calendar year, with the fiscal third quarter forecast representing “the bottom for Micron’s near-term sales and gross margin.”
The Boise, Idaho-based company said on Wednesday it expects revenue between $ 4.6 billion and $ 5 billion for its fiscal third quarter, falling short of analyst expectations of $ 5.3 billion according to IBES data from Refinitiv. The company cut planned capital expenditures for the 2019 fiscal year to $ 9 billion, Micron executives said, down from a previous forecast of between $ 9 billion and $ 9.5 billion.
Revenue fell to $ 5.84 billion from $ 7.35 billion, beating expectations of $ 5.3 billion.
The company said it bought back 21 million shares of its common stock for $ 702 million during the quarter as part of its $ 10 billion share buyback program, leaving a net cash position of $ 2.99 billion.
Reporting by Sayanti Chakraborty in Bengaluru and Stephen Nellis in San Francisco; editing by Sriraj Kalluvila and Leslie Adler
A picture illustration shows a Facebook logo reflected in a person’s eye, in Zenica, March 13, 2015. REUTERS/Dado Ruvic
(Reuters) – Facebook Inc (FB.O) will buy back an additional $ 9 billion of its shares, as it looks to pacify investors following a slump in its stock.
The social media giant’s shares, which have tumbled more than 22 percent this year, rose nearly 1 percent in extended trading.
The new program is in addition to a share buyback plan of up to $ 15 billion announced by the company last year.
Facebook is being investigated by lawmakers in Britain after consultancy Cambridge Analytica, which worked on Donald Trump’s U.S. presidential campaign, obtained personal data of 87 million Facebook users from a researcher.
Concerns over the social media giant’s practices, the role of political adverts and possible foreign interference in the 2016 Brexit vote and U.S. elections are among the topics being investigated by British and European regulators.
Reporting by Vibhuti Sharma in Bengaluru; Editing by Anil D’Silva
(Reuters) – Roku Inc forecast a surprise holiday-quarter loss and missed third-quarter revenue estimates for its high margin video streaming platform, sending its shares down nearly 13 percent in after-market trading on Wednesday.
FILE PHOTO A video sign displays the logo for Roku Inc, a Fox-backed video streaming firm, in Times Square after the company’s IPO at the Nasdaq Market in New York, U.S., September 28, 2017. REUTERS/Brendan McDermid/File Photo
The outlook overshadowed third-quarter revenue, which beat analysts’ estimates, and a loss that was smaller than expected.
Revenue from Roku’s streaming platform is a closely watched metric and the company has pinned hopes on the segment, which generates profit margins well above 70 percent.
Roku reported revenue of $ 100.1 million from the streaming platform unit, missing estimates of $ 103.2 million, according to FactSet data.
DA Davidson analyst Tom Forte said the pullback in shares was also a reflection of expectations being “too high” for the company’s third-quarter results.
Roku’s streaming devices have been facing intense competition from the likes of Apple TV and Google Chromecast.
This led the company to tap other revenue sources, including licensing its technology to television makers and earning a share of the advertising revenue from media companies on its platform.
The company is investing more on content for its recently launched Roku channel and is expanding it to more geographies, Chief Executive Officer Anthony Wood told Reuters.
“We added several news providers in anticipation of the mid-term elections and it was one of our best news days ever.”
Net loss attributable to shareholders narrowed to $ 9.5 million, or 9 cents per share, in the third quarter ended Sept. 30, from $ 46.2 million, or $ 8.79 per share, a year earlier. (bit.ly/2qz97eX)
On an adjusted basis, the company lost 9 cents per share. Revenue rose 39 percent to $ 173.4 million.
Analysts on average had expected a loss of 12 cents per share on revenue of $ 169.1 million, according to IBES data from Refinitiv.
The company’s shares were down 12.6 percent at $ 51.41 after the bell.
Reporting by Munsif Vengattil in Bengaluru and Ken Li in New York; Editing by Maju Samuel and Shounak Dasgupta
Sales to healthcare plans helped wearable maker Fitbit surprise Wall Street in the latest quarter and lift its shares from the basement.
Revenue from healthcare customers, which the company has yet to disclose by dollar amount, grew 26% in the third quarter from the same period a year ago. The business includes sales of Fitbit’s wearable devices, as well as software and services, to health plan providers and directly to some employers.
But overall revenue rose a mere 0.3%, as the company is still working to get back on track after sales of its main product, simple fitness trackers, stalled out over the past few years.
Nevertheless, investors were pleased that the company’s sales were at least stable after declining in the first half of the year. Fitbit’s (fit) shares, which hit an all-time low of $ 4.23 earlier this week, gained 7% in Wednesday’s regular trading and another 10% in extended trading after the earnings report, to $ 5.18.
Fitbit CEO James Park tells Fortune that the company will offer more details about its healthcare segment in coming quarters. “We’re calling it out now because it’s demonstrating a lot of traction and growth,” he said. Many plans use the fitness trackers to help users who have chronic diseases stay on top of their health and medication, he explained. “We’re really capitalizing on that growing need.”
About 1,600 health plans and other organizations are buying Fitbit products already. Last month, Humana (hum) expanded a partnership with Fitbit to include Fitbit Care, the company’s new virtual health coaching service built off of technology it acquired by buying Twine Health in February. Coaches can offer users health advice via an app, on the phone, and in person.
Still sales of simple fitness trackers, Fitbit’s original business, peaked several years ago. The drop has pummeled the company’s revenue.
Although the extra growth from healthcare helped Fitbit’s overall third quarter sales, they remained essentially flat at $ 394 million. But that was enough to beat the $ 381 million that analysts had expected as did adjusted profits of 4 cents per share, which were modestly higher than the 1 cent loss that had been expected.
In terms of profit on the basis of generally accepted accounting principles, Fitbit lost 1 cent per share, or $ 2.1 million.
Fitbit’s healthcare effort comes as some studies have recognized that wearables and the “gamification” of wellness can prompt people to exercise more and live healthier lives. That in turn has prompted some health plans and large employers to partner with the company and buy fitness trackers for workers along with software and services to track their progress. Apple (aapl) is also aiming at that segment with its Apple Watch.
Park’s decision to get Fitbit into the smartwatch market last year also paid big dividends. The company’s strong-selling Versa smartwatch, along with its less popular Ionic watch, grabbed $ 193 million of revenue, almost half of the total for the quarter and up from $ 165 million in the second quarter. Fitbit smartwatches outsold all other vendors except Apple in the U.S. market in the quarter, Park said.
Apple this year added several new health features, including an EKG reader and a fall detection system, to its smartwatch. Park wouldn’t say exactly how Fitbit would match Apple’s moves, but hinted the company had some new healthcare features of its own, coming soon.
“We are very focused on adding more advanced health capability to our products over time,” he said. “We are in clinical studies and validation for a few deeper health conditions such as sleep apnea and (Atrial fibrillation) and we’re working with the proper regulatory agencies to get that into the hands of consumers. as soon as we can.”
NEW YORK (Reuters) – Twitter Inc posted revenue and profit ahead of Wall Street estimates on Thursday, as higher advertising sales offset a drop in monthly users to push the company’s shares up nearly 12 percent before the opening bell.
People holding mobile phones are silhouetted against a backdrop projected with the Twitter logo in this illustration picture taken in Warsaw September 27, 2013. REUTERS/Kacper Pempel/Illustration/File Photo
Quarterly advertising revenue jumped 29 percent from a year earlier to $ 650 million, boosted by advertiser interest in broadcasts from media companies including Live Nation Entertainment, Major League Baseball and Major League Soccer.
That drove a similar rise in overall revenue from a year earlier to $ 758 million, beating an average analyst estimate of $ 702.6 million, according to Refinitiv data. The company reported adjusted profit of 21 cents per share, well above an average forecast of 14 cents.
However, Twitter posted a larger-than-expected decline in monthly active users in the third quarter, its second straight quarterly drop, and predicted the figure would fall again in the fourth quarter.
It blamed the declines in users on efforts to clean up the site from suspicious users, including accounts used in political influence operations, as well as its response to new privacy regulations in the European Union.
Monthly active users fell to 326 million in the third quarter, below the average analyst forecast of 331.5 million, according to FactSet. Twitter said it expects them to drop below 326 million in the current quarter, missing the average forecast of 333.4 million.
Twitter is fighting for its reputation by cutting and blocking fake users, but the toll on traffic is undermining faith in is ability to grow. Recent business progress has focused on getting current users to click on more ads, which has helped Twitter turn to a profit.
Analysts have warned that Twitter needs to stem declines in user growth so it can better compete for ad spending with rivals including Alphabet Inc’s Google, and Facebook Inc. Investors pay close attention to monthly user data because it is seen as a key indicator of future revenue, the bulk of which comes from ad sales.
Twitter’s usage has been stagnant for more than a year, causing analysts to worry that growth may have peaked.
Those concerns have been somewhat offset by increases in advertising sales from video which suggest the company is succeeding in efforts to generate more cash from each user.
Investors are looking to understand the financial impact of Twitter’s moves to clean up its platform by deleting accounts used for fraud, hate speech and election interference.
Twitter has removed millions of suspicious accounts this year including those that belong to Alex Jones and his conspiracy site Infowars.
“We’re doing a better job detecting and removing spammy and suspicious accounts at sign-up,” Chief Executive Jack Dorsey said in a statement.
Twitter said the number of its daily active users rose by 9 percent year-on-year, weaker than an 11 percent jump in the previous quarter and its slowest growth rate in two years. The company does not disclose the total number of daily users.
Twitter shares tumbled 19 percent when the company reported quarterly results on July 27. Its stock has fallen 36 percent since that earnings report, compared to a 6.4 percent decline in the S&P 500 index.
Of the 40 analysts polled by FactSet, 10 have a buy rating on the stock while 24 have a hold rating. Six have a sell rating. The average target price is at $ 32.91, about 16 percent higher Tuesday’s close of $ 27.54.
Reporting by Angela Moon and Munsif Vengattil; Editing by Jim Finkle and Patrick Graham
(Reuters) – Tesla Inc Chief Executive Elon Musk was filmed smoking marijuana and wielding a sword on a webcast, just hours before the automaker said its recently-appointed accounting chief would leave, the latest in a string of unusual behavior and executive departures that have stunned investors.
Shares of the electric carmaker tumbled more than 6 percent on Friday to $ 263.24, with investors on edge after a tumultuous August during which Musk proposed and then abruptly pulled the plug on a go-private deal.
Chief Accounting Officer Dave Morton resigned after just one month in the job because of discomfort with the attention on the company and pace of work during that time, Tesla said in a filing on Friday. It later said that Chief People Officer Gaby Toledano would not return from a leave of absence, just over a year after joining.
Later on Friday, Tesla named a new president of automotive operations, promoting eight-year Tesla employee and former Daimler truck exec Jerome Guillen into the role overseeing all automotive operations and reporting to Musk.
That move, described in a company blog with several other promotions as a result of board and management discussions, gives Musk a seasoned auto industry veteran to lean on at a time when some investors have called for a new chief operating officer. Shares barely moved after hours, when the promotions were announced.
Morton and Toledano, whose departures come shortly after the U.S. Securities and Exchange Commission opened an inquiry into Musk’s aborted privatization plan, join dozens of senior executives who have left Tesla.
“Since I joined Tesla on August 6th, the level of public attention placed on the company, as well as the pace within the company, have exceeded my expectations. As a result, this caused me to reconsider my future,” Morton said in the filing.
Late on Thursday, Musk was filmed drinking whiskey, briefly smoking marijuana and wielding a Samurai sword during a 2-1/2-hour live Web show with comedian Joe Rogan that swiftly spread across social media.
Taking a puff from a joint, which Rogan said was a blend of tobacco and marijuana and legal in California, Musk said he “almost never” smoked.
“I’m not a regular smoker of weed,” Musk said. “I don’t actually notice any effect … I don’t find that it is very good for productivity.”
It was the latest in a string of unconventional behavior by the billionaire South African native who is also CEO of rocket startup SpaceX.
Even before Musk’s surprise Aug. 7 tweet that he had funding “secured” for a go-private deal, Tesla had been under scrutiny from investors, analysts and short-sellers as it works to hit production targets and slow its cash burn.
Morton, who is walking away from a $ 350,000 base salary and a $ 10 million new-hire stock grant that would vest over four years, said he believed “strongly” in Tesla and that he had no disagreements with the company’s leadership or its financial reporting.
Analysts on Friday reiterated their call for Tesla to bring in another senior leader.
“We have been calling for a co-CEO or COO to assist to codifying the leadership structure and in so doing, the culture at Tesla,” said James Albertine, analyst at brokerage Consumer Edge, speaking before the promotions were announced.
“We think this is further evidence that the time is now for management and the board to address these issues.”
SOBERING EFFECT ON INVESTORS
Tesla’s $ 1.8 billion junk bond maturing in August 2025 plunged as much as 4 cents on the dollar to below 82 cents, a record low, in Friday trading, pushing the yield above 8.8 percent.
Coupled with an upfront cost of 21 percent of insured value, it now costs an investor around $ 280,000 to insure $ 1 million of Tesla debt for a year.
With Tesla’s stock falling to its lowest level since April, short sellers added 810,000 shares to their positions, bringing the total as of Thursday to about 32.6 million shares, according to S3 Partners, a financial technology and analytics firm.
Tesla has told investors it expects to turn a profit in the second half of this year, a forecast the company’s head of investor relations, Martin Viecha, reiterated at a conference earlier this week sponsored by RBC Capital Markets, RBC analyst Joseph Spak wrote in a note on Thursday.
Viecha also restated Tesla’s forecast that it will build 50,000 to 55,000 of its Model 3 sedans in the current quarter, and indicated the company’s working capital will improve as production increases, Spak wrote.
Prominent short-seller Andrew Left has sued Tesla and Musk, saying in his proposed class-action complaint on Thursday that Musk’s issuance of materially false and misleading information related to his abandoned plan harmed both short-sellers and those hoping the stock would rise.
Reporting by Nivedita Balu and Ismail Shakil in Bengaluru, additional reporting by Noel Randewich in San Francisco, Joe White in Detroit and Dan Burns in New York; Writing by Meredith Mazzilli; Editing by Matthew Lewis and Rosalba O’Brien
SAN FRANCISCO (Reuters) – Chief Executive Elon Musk said on Tuesday he is considering taking Tesla Inc private in what would be the largest deal of its type, moving the electric car maker out of the glare of Wall Street as it goes through a period of rapid growth under tight financial constraints.
“Am considering taking Tesla private at $ 420. Funding secured,” Musk said on Twitter bit.ly/2Om3gn3. At $ 420 per share, a deal would be worth $ 72 billion overall.
In a letter to Tesla employees published more than an hour later on the company’s blog here, Musk explained that going private would be “the best path forward.” Such a move – over which no final decision had been made – would let Tesla “operate at its best, free from as much distraction and short-term thinking as possible,” he wrote.
Tesla shares closed up 11 percent at $ 379.57, slightly below their all-time high.
Asked on Twitter whether Musk would continue to be CEO under such a scenario, he replied there would be “no change.”
Musk has been under intense pressure this year to turn his money-losing, debt-laden company into a profitable higher-volume manufacturer, a prospect that has sent Tesla’s valuation higher than that of General Motors Co.
The company is still working its way out of what Musk called “production hell” at its home factory in Fremont, California, where a series of manufacturing challenges delayed the ramp-up of production of its new Model 3 sedan, on which the company’s profitability rests.
The Silicon Valley company faces a make-or-break moment in its eight-year history as a public company as competition from European automakers is poised to intensify with new electric vehicles from Audi and Jaguar, with more rivals to follow suit next year.
Meanwhile, Tesla has announced plans to build a factory in Shanghai, China, and another in Europe, but details are scarce and funding unknown.
Going private is one way to avoid close scrutiny by the public market as Musk and the company face those challenges. Musk has feuded publicly with regulators, critics, short sellers and reporters, and some analysts suggested that less transparency would be welcomed by Musk.
“Musk does not want to run a public company,” said Gene Munster of Loup Ventures, as Tesla’s ambitious mission makes it “difficult to accommodate investors’ quarterly expectations.”
Musk owns nearly 20 percent of the company. He said in his letter to employees he did not seek to expand his ownership.
A price of $ 420 per share would represent a nearly 23 percent premium to Tesla’s closing price on Monday, which gave the company a market value of about $ 58 billion.
In his letter, Musk suggested a choice for shareholders of selling their shares for $ 420 each or remaining investors in a private Tesla. He said he hoped all current investors would remain were the company to go private.
He made no mention in his tweets nor his letter where the funding for a deal would come from, and the letter did not discuss funding for the plan.
Like any other investor, Musk is beholden to securities laws and several securities attorneys told Reuters he potentially could face lawsuits if it was proven he did not have secure financing at the time of his tweet.
(GRAPHIC-Market value of Tesla, Ford, GM: tmsnrt.rs/2n4mFjh)
BIGGEST GO-PRIVATE DEAL
If Musk were to succeed in taking Tesla private, it would be the largest leveraged buyout of all time, beating the record set by the $ 45 billion deal for Texas power utility Energy Future Holdings, which ended in bankruptcy in 2014.
Raising both the debt and equity required for such a deal would be a challenge. Many major Wall Street bankers contacted by Reuters said on condition of anonymity they were not aware of Musk’s plans ahead of his tweets, and several expressed skepticism that a leveraged buyout of Tesla could be financed given the company’s negative cash flow.
“It’s unfathomable to me that anyone would finance the acquisition of such a liability-laden company that is losing so much money and have massive capex requirements going forward,” said Mark Spiegel, portfolio manager of hedge fund Stanphyl Capital Partners, who holds a short position in Tesla and has been a vocal critic of Musk on Twitter.
The most obvious equity partners for Musk would be a sovereign wealth fund such as Saudi Arabia’s Public Investment Fund (PIF) or major technology investment funds such as SoftBank Group Corp’s Vision Fund, bankers said.
China’s Tencent Holdings, which took a 5 percent stake in Tesla last year, is another possible partner.
Such foreign sources of capital would be subject to scrutiny by the Committee on Foreign Investment in the United States (CFIUS), which looks closely at deals for potential national security risks.
Earlier on Tuesday, a source familiar with the matter said Saudi Arabia’s PIF had bought a minority stake of just below 5 percent in Tesla.
The U.S. Securities and Exchange Commission declined to comment on Musk’s tweet, but the agency allows companies to use social media outlets like Twitter to announce key information in compliance with its fair disclosure rules if investors are alerted about which social media outlets will be used.
Tesla alerted investors in a 2013 SEC filing that they should follow Musk’s Twitter feed for “additional information” about the company. There is no reference to Musk’s Twitter account on the company’s investor relation page under “investor communication,” although Tesla’s Twitter feed is included.
In his letter to employees, Musk wrote that, “as the most shorted stock in the history of the stock market, being public means that there are large numbers of people who have the incentive to attack the company.”
A short squeeze is a trading scenario that occurs from time to time in heavily shorted stocks, when bearish traders are forced to buy shares to avoid big losses – something that ends up pushing the stock only higher.
Short interest in Tesla on Tuesday stood at nearly $ 13 billion, according to S3 Partners, a financial analytics firm.
(GRAPHIC-Tesla shares jump 10 percent, near record high: tmsnrt.rs/2MbzJin)
Reporting by Sonam Rai in Bengaluru, Alexandria Sage in San Francisco, Carl O’Donnell, Liana Baker, David Randall in New York and Pete Schroeder in Washington; editing by Saumyadeb Chakrabarty, Bill Rigby and Chris Reese
(Reuters) – Etsy Inc on Thursday raised its full-year revenue growth forecast, boosted by an increase in its transaction fee for sellers, sending shares of the company surging 35 percent to a record high.
The share jump pushed up the company’s market cap by $ 1.4 billion.
The site for handmade goods, which struggled after its initial public offering in 2015, began its turnaround effort after board member and former eBay executive Josh Silverman took charge as chief executive officer in May last year after ex-CEO Chad Dickerson stepped down.
Silverman came to Etsy amid concerns about slowing growth, poor functionality of the company’s website and the specter of competition from Amazon.com Inc, which launched a marketplace for handmade goods in 2015.
The company now expects revenue growth of 32 percent to 34 percent in 2018, up from its previous forecast of 22 percent to 24 percent. It also raised the higher end of its gross merchandise sales growth range.
Etsy’s share movement was in contrast to arts and crafts specialty retailer Michaels Cos Inc, which dropped 15 percent after it expected flat comparable sales in the second quarter and comparable sales growth of up to 1.5 percent in fiscal 2018.
Etsy, however has beaten average analysts’ estimates in every quarter since Silverman’s appointment to the helm. It missed estimates in the four quarters prior to his arrival.
The company’s shares have more than doubled in the last 12 months.
“Etsy management has improved its merchandising, which in turn has led to stronger merchant sales. As Etsy is doing more for the merchants, Etsy is able to charge more, especially since the fees were relatively cheaper than competitors,” analyst Ronald Bookbinder of IFS Securities said.
Etsy said it would increase the transaction fee it charges when a seller makes a sale to 5 percent from 3.5 percent. The new fee would apply to the cost of shipping.
The company said it plans to increase direct marketing spending by at least 40 percent in 2018 and revamp community platforms.
Etsy has shifted its focus to areas that are showing the most growth for the handmade marketplace, particularly on its core e-commerce site.
The company has improved its website’s search function and uses artificial intelligence to provide better product recommendations for customers. In 2017 the company also ran holiday promotions for the first time.
“They took that really good business model and fine tuned the engine and now they have got that engine firing on all cylinders,” D.A. Davidson & Co. analyst Tom Forte said.
Reporting by Arjun Panchadar in Bengaluru; Editing by Bernard Orr and Shounak Dasgupta