Etsy stock down as much as 18% after loss

Etsy revenue about in line

Etsy delivered quarterly results on Tuesday that missed expectations. In its first report since going public, the e-commerce company announced a loss of 84 cents per share on revenue of $59 million.

The loss per share was not immediately comparable to analysts' estimates for earnings of 3 cents per share. Wall Street had expected the company to report $59 million in revenue, according to a consensus estimate from Thomson Reuters.

The company's shares were down more than 18 percent in extended hours trading.

Etsy reported a net loss for the first quarter of $36.6 million, widening from about $500,000 in the year-earlier period. The shortfall was a result changes to its corporate structure, the company said.

Read MoreMeet six-figure entrepreneurs behind the Etsy IPO

Kenny Polcari, director of NYSE floor operations at O'Neil Securities, said investors should give Etsy another chance.

"The problem with these stocks that are brand new like this is the guidance is off and then investors buy into it and then they hear those numbers and they bail right out," he said in an interview on CNBC's "Closing Bell" on Tuesday. "I think it's an overreaction. But I think you have to give it an opportunity. I think it is cutting edge."

The company said gross profit grew faster than revenue because of "leverage in the cost of revenue for employee-related and hosting and bandwidth costs."

Etsy also reported total operating expenses were up $42.7 million in the first quarter, a rise of 72.6 percent year over year. This came from marketing, higher employee-related expenses and product development expenses.

"Our recent IPO is a milestone in our mission to reimagine commerce in ways that build a more fulfilling and lasting world," said CEO Chad Dickerson, in a press release. "At the end of the first quarter of 2015, the Etsy community included more than 1.4 million active sellers and 20.8 million active buyers. ... We will continue to concentrate on creating long-term value for Etsy and our community, which we believe will result in sustainable long-term returns for our investors."

The marketplace for entrepreneurs

Etsy expects its second quarter to be impacted by a stronger dollar in terms of international sales. The company also projects to increase the pace of hiring and spend more on marketing. It also noted that expenses such as $300,000 for its IPO, among others, would not recur in the period.

However, Etsy did not provide guidance on earnings or revenue for the second quarter.

The online marketplace went public in mid-April. Its stock has risen more than 25 percent from the IPO pricing of $16 per share but remains below the all-time high it hit on its first day of trading.

Etsy was founded in 2005 and is headquartered in Brooklyn, New York. The company provides a marketplace where people around the world connect to sell and buy unique goods.

Read MoreIs Etsy the next eBay, Amazon or not even close?

It is the company's job to make sure people have the right expectations, Ross Gerber, president and CEO of Gerber Kawasaki, said Tuesday in an interview with CNBC's "Closing Bell."

"The company is coming back to what the public price was when it IPO'd, which I think presents a better opportunity than paying an overpriced premium," he said.

Gerber said he likes the name, but thinks there is a problem with how the company is valued. "When you pay 10 times revenue for a company everything has to go right. I'd like to see Etsy come back and I think it's a great name to own, it just needs to come back," he said.

An employee walks past a quilt displaying Etsy signage at the company's headquarters in Brooklyn, New York.
Victor J. Blue | Bloomberg | Getty Images

Last week, shares of the company fell on news that it might be selling counterfeit goods. A Wedbush analyst downgraded the stock to "underperform," citing research to show as many as 2 million items on the site that could be fake or constitute trademark or copyright infringement.

The analyst said that Etsy might not be held liable for the infringements but noted that the issue could still limit volume growth.

Etsy did not respond to a request for comment, according to an Associated Press report last week.

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—The Associated Press contributed to this report.

Disclosure: Neither Ross Gerber nor Kenny Polcari own shares of Etsy.

Correction: This version corrects the day of Kenny Polcari's interview with "Closing Bell."