Etsy's stock price surges following the release of its fourth-quarter earnings report.

• Etsy's shares experienced a 18% increase in value during extended trading on Thursday.
• The company's fourth-quarter results exceeded expectations on both the revenue and profit margins.
• Etsy struggled to provide clear direction for the first quarter due to the challenging comparison with the previous year's pandemic-driven surge in online sales.

On Thursday, shares of climbed as much as 18% in extended trading after reporting better-than-expected results for the fourth quarter. During regular trading, shares had already climbed 10%, as stocks staged a late-day rally after first plunging on news of Russia’s invasion of Ukraine.

Here’s how the company did:

• Analysts surveyed by Refinitiv predicted that earnings would be 79 cents lower than the actual $1.11.
• Revenue: $717 million vs. $685 million expected.

Etsy reported 96.3 million active buyers on its platform in the fourth quarter, slightly higher than analysts predicted 95.6 million.

Etsy sales growth slowed to 100% year over year in recent quarters.

The digital retailer anticipates first-quarter revenue to fall between $565 million and $590 million, lower than Wall Street's projected revenue of $630 million. Additionally, gross merchandise sales during the quarter are expected to be within the range of $3.2 billion to $3.4 billion, which is below consensus estimates of $3.5 billion.

Despite the middling expectations, investors remained focused on the fourth-quarter earnings and sales results.

Rachel Glaser, Etsy's CFO, attributed the weak first-quarter GMS outlook to challenging comparisons with the previous year's pandemic-related surge in orders and increased government stimulus spending.

Online retailers such as Etsy, Amazon, and Walmart have seen a revenue increase during the pandemic's worst months. With lockdowns limiting in-store visits, consumers turned to e-commerce for both essential and nonessential purchases.

Etsy, an online marketplace known for handmade and personalized goods, will be able to keep expanding its business in a post-pandemic world, according to Glaser.

Glaser stated that despite the absence of substantial tailwinds such as stimulus checks and lockdowns, our first quarter 2022 guidance indicates that we will maintain the gains made in 2021, demonstrating our confidence in the sustainability of the past two years' growth. Additionally, assuming stable macroeconomic conditions, we anticipate lower GMS growth in the first half of 2022 compared to the previous year, followed by higher GMS growth in the second half due to the more challenging comparisons in the first half.

Dan Ives advises investors to purchase tech giants such as Apple and Microsoft.