Etsy Sells Depop to eBay for $1.2 Billion, Shares Surge Despite Mixed Quarter

Etsy's stock rose 9% Thursday, a vote of confidence from investors following the company's announcement that it will sell its fashion resale app, Depop, to eBay for approximately $1.2 billion in cash. The move overshadowed a fourth-quarter earnings report that presented a complex picture of the online marketplace's health.

The company's earnings per share of 92 cents exceeded analyst expectations. However, revenue of $882 million fell just short of estimates, and a key metric, gross merchandise sales, declined 3.8% from the previous year to $3.59 billion. Etsy attributed part of that annual drop to the sale of its Reverb platform last June.

In a statement, Etsy CEO Kruti Patel Goyal framed the Depop sale as a strategic refocusing, allowing the company to concentrate entirely on its core marketplace for handmade and vintage goods. For eBay, acquiring Depop, which is popular with younger shoppers, bolsters its position in the fast-growing online fashion resale sector. eBay's shares also climbed 3% on the news.

Beneath the headline deal, Etsy's quarterly net income fell 14.8% year-over-year. The company is navigating a competitive retail environment and what it described in a filing as an ongoing pullback in consumer spending on non-essentials. While the number of active sellers on the platform grew to 8.76 million, active buyers saw a slight decline.

Looking ahead, Etsy's first-quarter forecast suggests continued pressure, with gross merchandise sales guidance well below both last year's results and analyst projections. The Depop cash infusion provides a significant financial cushion as Etsy works to reinvigorate its primary business.

Source: CNBC