Etsy Shares Fall After Citron Research Calls Out Platform for Counterfeit Goods


Citron Research said on Thursday Etsy Inc has become one of the largest platforms in the world for counterfeit goods, sending the e-commerce firm’s shares down about 6 percent.

Etsy did not immediately respond to a Reuters request for comment.

Citron Research, which cemented its reputation in the research industry by calling out poor performers and betting against their stock, said the percentage of counterfeit goods on the platform had become too large and Etsy could no longer defend it as a small percentage of revenue.

The research firm alleged that Etsy has allowed sellers on the platform to buy “ad words” of the brands and then labeled many of them as trusted websites.

Citron, founded by Andrew Left, added Etsy risks running afoul of the Federal Trade Commission, the Department of Justice, the U.S. Securities and Exchange Commission as well as the Customs and Border Protection.

Some analysts expect Etsy to see a grim holiday-quarter as lower income consumers rein in spending on home goods, clothes, jewellery and accessories, which combined makes about 60 percent of the company’s gross merchandise value.

In November, the e-commerce platform posted a third-quarter loss for the first time in eight quarters, hurt by higher shipping costs and a strong dollar.

By Ananya Mariam Rajesh; Editing by Krishna Chandra Eluri

Learn more:

Why Etsy Bought Depop

The marketplace’s $1.6 billion acquisition of the young-skewing resale platform is a big bet on the future of secondhand fashion. It also spells bigger, badder competition for the growing field of contenders in the category.

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