10 Worst Augmented Reality (AR) Stocks According to Short Sellers

7. Etsy, Inc. (NASDAQ:ETSY)

Number of Hedge Fund Holders: 36

Short Interest: 12.9%

Etsy, Inc. (NASDAQ:ETSY) is an e-commerce company based in Brooklyn, New York, but it has started branching out its business to include AR in various tools. The company has recently introduced an AR feature in its iOS app that places Etsy sellers’ artwork on a user’s wall using AR tools. Nearly a million Etsy items now have real-size AR functionality added to them to assist users of the app.

Investors are shying away from Etsy, Inc. (NASDAQ:ETSY) this year, though, considering disappointing financial results in the second quarter. The company’s gross merchandise sales were down by 3.2% year-over-year, a decline brought about by headwinds from a tough macroeconomic environment. This came right after a 5.3% decline in gross merchandise sales in the first quarter. While the decline has narrowed a bit, the trend still shows an overall downward trajectory for Etsy, Inc. (NASDAQ:ETSY). Habitual buyers on Etsy, Inc. (NASDAQ:ETSY) also decreased by 3% year-over-year in the second quarter.

While Etsy, Inc. (NASDAQ:ETSY) was doing well during the pandemic, probably because the quarantine drove people to make more online purchases, the current market position is heavily disfavoring the e-commerce player. Consumers have moved back to pre-pandemic spending habits with Etsy, Inc. (NASDAQ:ETSY) facing the consequences of this. The company’s guidance for the second half of 2024 is also offering only a modest acceleration in gross merchandise sales, which is not enough to tempt investors to stick around or take up positions in this stock.

Etsy, Inc. (NASDAQ:ETSY) was spotted in the portfolios of 36 hedge funds in the second quarter, with a total stake value of $1.2 billion. Elliott Management was the largest shareholder in the company, holding 4,500,000 shares.

Artisan Partners mentioned Etsy, Inc. (NASDAQ:ETSY) in its second-quarter 2024 investor letter:

“We ended our investment campaigns in Bentley and Etsy, Inc. (NASDAQ:ETSY) during the quarter. Etsy is the leading e-commerce marketplace for buyers and sellers of unique, hard-to-find handmade or vintage products. Given its large addressable market, experienced management team and unique technology investments, we believed the company had a long runway for further top-line growth. However, financial results have been disappointing, and we decided to exit the position.”