Shares of Etsy Inc. (NASDAQ:ETSY) plunged 23 percent Wednesday, a day after the online crafts marketplace posted a wider-than-expected loss in the most recent quarter. The earnings miss marked the company's first quarterly results announcement since going public in April. The Brooklyn, New York, e-commerce platform for handmade and vintage goods made its stock market debut in an IPO that valued the company at more than $2 billion.

Etsy’s debut was strong, demonstrating the stock market’s desire for a new tech IPO following a slow first quarter, but the stock price has quickly declined since then. Etsy’s stock opened for trading on April 16 at $31 and rose as high as $35.67, more than doubling its initial pricing of $16 per share. But the stock tumbled 23 percent to as low as $15.70 in morning trading Wednesday. It has now lost roughly half of its value just over a month after its IPO. 

With its stock now trading below its initial offering price, Etsy could be an attractive target for larger e-commerce companies. Etsy is a market leader in a niche within a broader industry, and there are plenty of ecommerce players that would benefit from that kind of diversification, says James Gellert, chairman and chief executive officer at Rapid Ratings International Inc.

“Etsy could easily be an acquisition target,” Gellert said in a note Tuesday. “Etsy has a strong enough base that they would be logical acquisition irrespective of how much they can grow their business from here.”

Etsy is confronting profitability problems and has a history of operating losses. The e-commerce company warned ahead of its IPO it might not achieve or maintain profitability in the future, as stated in its S1 filing.

“Buying Etsy could be a better way for competitors to enter this niche business, rather than trying to build something themselves,” Gellert said.

For the quarter ended March 31, Etsy reported a fiscal first-quarter net loss of $36.6 million, or 84 cents per share, as revenue rose 44 percent to $58.5 million, compared with a loss of $463,000, or 1 cent per share, on sales of $40.5 million during the same year ago period in 2014.

While the company posted 2014 revenue of $195.6 million, up more than 56 percent from a year earlier, it reported net losses of $15.2 million in 2014 and $800,000 in 2013.

Analysts downgraded Etsy shares earlier this month, warning that the company is facing a problem with counterfeit goods offered on its network. Wedbush Securities Inc. downgraded Etsy’s stock to Underperform from Neutral, with a 12-month price target of $14.

Counterfeit items include those that infringe on Louis Vuitton, Chanel and Michael Kors, and a wide range of Disney and NFL brands, the analysts said. A sample of high-risk listings indicated some violations may be 20 times more likely on Etsy than on eBay Inc. and even more likely than Alibaba Group Holding Ltd.’s Aliexpress, the firm said.

As of March 31, the site had 1.4 million active sellers and 20.8 million active buyers.