Etsy Inc. experienced a significant surge in its stock price, climbing over 14% during extended trading hours after announcing that eBay is set to acquire its secondhand clothing platform, Depop, for approximately $1.2 billion in cash. This move marks a pivotal moment for Etsy, coming nearly five years after the company acquired Depop for about $1.62 billion. The popular app, founded in the U.K., has attracted a younger demographic, with around 90% of its user base comprised of individuals under the age of 34.
Etsy’s Chief Executive Officer, Kruti Patel Goyal, expressed enthusiasm about the transaction, emphasizing it allows the company to concentrate on expanding the Etsy marketplace to better serve its buyers and sellers. The deal is anticipated to finalize in the second quarter of this year.
In recent times, Etsy has pursued a “house of brands” strategy, acquiring several niche online marketplaces to bolster its market position against larger competitors such as Amazon. However, the company has since divested many of those acquisitions, including Brazilian e-commerce platform Elo7 in 2023 and the musical instrument site Reverb last year.
Etsy has faced challenges in achieving growth post-pandemic, grappling with intense competition from not only Amazon but also Shopify, and lower-cost marketplaces such as Temu, Shein, and TikTok Shop. The company’s latest figures indicate a decline in active buyers and gross merchandise volume year-over-year in 2024, with continuing downward trends from the previous year. Furthermore, Etsy has felt the economic sting of former President Donald Trump’s tariff policies and a difficult macroeconomic climate that has curtailed discretionary spending among consumers.
eBay CEO Jamie Iannone noted that acquiring Depop would enhance eBay’s position in the fashion sector while allowing the company to tap into a younger audience within the growing recommerce market. In his statement, Iannone described the acquisition as an opportunity to strengthen one of eBay’s newest and fastest-growing focus categories.
Following the announcement, eBay’s shares also rose, gaining more than 8% in extended trading. This development coincided with the company’s fourth-quarter earnings report, which surpassed analyst expectations. eBay reported an adjusted earnings per share of $1.41 on revenues of $2.97 billion, exceeding forecasts of $1.34 per share and $2.88 billion. The company experienced a 15% sales increase compared to the previous year.
Looking ahead, eBay forecasts adjusted earnings per share for the first quarter in the range of $1.53 to $1.59, with expected revenue between $3 billion and $3.05 billion. These projections again exceed analyst anticipations, indicating a likely positive trajectory for the company moving forward.
