Etsy’s stock surged over 14% in after-hours trading following the announcement that eBay is acquiring its fashion resale subsidiary, Depop, for approximately $1.2 billion in cash. This strategic divestiture marks a significant pivot for Etsy, moving away from its “house of brands” strategy and refocusing on its core marketplace.
The acquisition comes nearly five years after Etsy purchased Depop for roughly $1.62 billion, a move designed to capture the burgeoning market of younger consumers actively engaged in the circular fashion economy. Depop, with an estimated 90% of its user base under 34, provided Etsy with a crucial gateway to this demographic. However, Etsy CEO Kruti Patel Goyal stated that the transaction will allow the company to “focus exclusively on the compelling opportunity we see in front of us: to grow the Etsy marketplace in ways that matter most to our buyers and sellers.”
This sale follows Etsy’s recent unwinding of other acquired niche marketplaces, including Elo7 and Reverb, signaling a broader strategic recalibration. The company has faced headwinds in recent years, grappling with slowing growth post-pandemic e-commerce surge and intense competition from giants like Amazon and Shopify, as well as increasingly popular ultra-low-cost platforms such as Temu and Shein. Declines in active buyers and gross merchandise volume on its core platform in 2024, a trend that persisted last year, underscore these challenges. Furthermore, Etsy has navigated macroeconomic pressures, including discretionary spending pullbacks and past tariff policies.
For eBay, the Depop acquisition represents a significant opportunity to bolster its presence in the fashion category, a key growth area. eBay CEO Jamie Iannone highlighted Depop’s potential to “advance one of our newest and fastest-growing Focus Categories” and “reach a younger demographic across the expanding recommerce landscape.”
The news of the Depop sale coincided with eBay’s fourth-quarter earnings release, which also saw a positive market reaction with its shares climbing more than 8% in extended trading. eBay reported robust financial results, exceeding analyst expectations. The company posted adjusted earnings per share of $1.41 on revenue of $2.97 billion, a 15% increase year-over-year. Gross merchandise volume reached $21.2 billion, up 10% year-over-year, surpassing Wall Street forecasts. Looking ahead to the first quarter, eBay anticipates adjusted earnings per share between $1.53 and $1.59 on revenue ranging from $3 billion to $3.05 billion, also projecting above analyst estimates.
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