Etsy shares jump after Depop sale; demand pressures weigh on results

By Koyena Das and ‌Neil J Kanatt

Feb ​19 (Reuters) - ​Etsy shares jumped about 10% on Thursday, after the online marketplace sold off its Gen Z-focused fashion resale platform Depop to ‌EBay, with investors looking past dour quarterly results and forecasts.

The nearly $1.2 ⁠billion deal, announced after markets closed on Wednesday, is expected to help Etsy double down ‌on its core handmade and ‌vintage goods marketplace as it pursues a turnaround under its new CEO. The company has been grappling with soft demand from inflation-weary shoppers and ​fierce competition from e-commerce giants, including Amazon.com.

"Depop had largely been overlooked by investors, so the valuation Etsy secured appears to have come as ⁠a positive surprise," CFRA analyst Arun Sundaram said.

Although the platform has been expanding rapidly, it has been "meaningfully ​less profitable than the core Etsy marketplace," and the divestiture should lift Etsy's margins and overall financial profile, he said.

The ​sale of Depop, which Etsy acquired for $1.63 ‌billion in 2021, is expected to close in the second quarter of 2026. The company had also sold its online ⁠music-gear marketplace, Reverb, to private investors in 2025 to focus on its core operations.

Etsy posted fourth-quarter revenue of $881.6 million, below analysts' average estimate of $884.9 million, according to ⁠data compiled by LSEG.

Gross merchandise sales (GMS) — a key sales metric — at Etsy marketplace fell 1% ​on a currency-neutral basis to $3.29 billion during the quarter.

Adjusted earnings before interest, taxes, depreciation and amortization came in at $222.5 million, while analysts estimated $213.5 million.

The company forecast first-quarter GMS at $2.38 ‌billion to $2.43 billion, down from $2.8 billion reported a year earlier. For full-year 2026, Etsy expects GMS to grow modestly, ‌supported by marketing initiatives.

"We've assumed that macroeconomic conditions, particularly those impacting consumer discretionary ⁠spending remains stable relative to ‌where they are at present," ​Chief Financial Officer Lanny Baker said on a post-earnings call.

(Reporting by Koyena Das and Neil J Kanatt in Bengaluru; Editing by ‌Shilpi Majumdar)

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