Etsy stock is unraveling like a poorly knit neckerchief.

In its closely watched first earnings report as a public company, the online marketplace for handcrafted goods created a big disappointment, posting an enormous net loss of $36.6 million for the quarter. That is more than double Etsy's total $15 million loss for the entire year of 2014 and a huge jump from a relatively modest $500,000 net loss in the first quarter of 2014. Etsy made $58.5 million in revenues for the March quarter.

In a statement, the CEO of Etsy, Chad Dickerson, played up the company's popularity, emphasizing its 1.4 million active sellers and 20.8 million active buyers.

"We made progress down our path to make Etsy an everyday experience, build local marketplaces, globally, offer high-impact seller services, and expand the Etsy economy," Dickerson said.

Etsy has faced resistance from some members of its community, who have argued that the marketplace, as it has grown, has lost its soul.

Handmade stuffed emoji sold on Etsy.

The company chalked up much of the loss to what it described as a tax provision tied to a recent corporate restructuring.

In its IPO last month, Etsy warned of two "material weaknesses" related to taxes, but didn't describe the specific size or scale of the problem. The company hinted some problems in its accounting for income taxes and said it would get a new global head of tax.

Etsy anticipated a few issues that could also hurt its financial performance for the next quarter, including plans to boost hiring and spend more on marketing, as well as the strong dollar, which could hurt the value of international sales.

Wall Street was not pleased: the stock fell by about 15% in after hours trading. The stock more than doubled on its first day from the IPO price of $16 a share, but it has gradually ticked back down since then. As of publication, the stock was hovering around $18 a share. Not exactly a warm welcome to the newly public company.

ETSY data by YCharts