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Why D-Market Electronic Services & Trading Stock Got Pummeled Thursday

By Danny Vena – Aug 26, 2021 at 2:33PM

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In its first quarter as a public company, "the Amazon of Turkey" failed to deliver the goods.

What happened

Shares of D-Market Electronic Services & Trading (HEPS 3.47%) plunged on Thursday, falling as much as 26% after the company delivered disappointing earnings results and announced some high-level management changes. As of 2:16 p.m. EDT, the so-called "Amazon of Turkey" saw its stock collapse 25.4%.

So what

The leading e-commerce provider in Turkey revealed its growth had slowed to a crawl and that it was shaking up its management team. For the second quarter, D-Market generated revenue of 1.75 billion lira (roughly $209 million), up 5% year over year. At the same time, gross merchandise volume, or GMV, of 5.9 billion lira ($704 million) climbed 38%. 

Person smiling while delivering packages.

Image source: Getty Images.

To give these numbers some context, D-Market's revenue grew 145% year over year in 2020, and was up 65% in the first quarter. At the same time, GMV increased 111% in 2020, and 95% in the first quarter, so the recent results marked a significant deceleration of the company's growth. 

Investors were also greeted by another unexpected development, in the form of an executive leadership shakeup. Murat Buyumez, D-Market's chief strategy and business officer, will assume the role of chief commercial officer in charge of category management and commercial operations. At the same time Mutlu Erturan, D-Market's current CCO, will become its chief business officer, heading up the company's new ventures, growth initiatives, and strategic opportunities. The role of chief strategy officer will remain vacant for now. 

Now what

Wall Street dislikes uncertainty and changes to top level executives almost always raise eyebrows. Investors were already spooked as D-Market's growth came to a screeching halt less than two months after its initial public offering. That combination of factors no doubt fueled the sell-off.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Danny Vena owns shares of Amazon. The Motley Fool owns shares of and recommends Amazon. The Motley Fool recommends the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 calls on Amazon. The Motley Fool has a disclosure policy.

Stocks Mentioned

D-MARKET Elektronik Hizmetler ve Ticaret Anonim Sirketi Stock Quote
D-MARKET Elektronik Hizmetler ve Ticaret Anonim Sirketi
$0.76 (3.47%) $0.03 Stock Quote
$94.13 (-1.44%) $-1.37

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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