Why Etsy's Stock Is Popping Even Though It’s Losing Money

From knit beanies to reclaimed lumber end tables, Etsy sellers had a busy quarter, with the handmade and vintage-goods sales platform beating analyst expectations with revenues of $87.8 million for the fourth quarter of 2015. Year over year, merchandise sales rose by 21%, the company said.

Despite a per-share earnings loss of 4 cents -- versus analyst projections of a 1-cent a share gain -- shares had risen more than 15% by 5:30 ET in after hours trading. This was most likely the result of tempered expectations beforehand, since shares had fallen in advance of Etsy's report. Analysts worried about competition from Amazon's "Handmade", a platform for independent artisans to sell their products that launched last year and bears a lot of similarities to Etsy.

For all its folksy charm, Etsy has had a bumpy ride adjusting to Wall Street's hustle: At market close, shares were still down 11% since the beginning of the year, and has plummeted a whopping 75% since going public last year. It's also lost $54 million over the past year.

Etsy has been looking for ways to bridge the divide between its online sales channel and the brick-and-mortar world. Last year, it launched a function on its app that let vintage and craft lovers find stores and events near them where Etsy sellers were hawking their wares, and earlier this month, it announced a shop at the Macy’s Herald Square in New York City that will feature items from multiple sellers throughout 2016.

Update: This story has been updated to clarify how the Etsy shop at Macy’s will operate.