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Stocks of Etsy Are Having Their Best Day in Seven Months After Elliott Takes a 'sizeable' Stake in the Company

February 2, 2024
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Investors displayed a notable interest in Etsy Inc. on Thursday following the announcement that a partner from hedge fund Elliott Investment Management L.P. had joined the online crafts marketplace's board of directors. This move came after Elliott Investment Management recently acquired a substantial stake in Etsy.

Etsy revealed that Marc Steinberg, responsible for managing public- and private-equity investments at Elliott, has been appointed to the board, effective February 5. Additionally, he will take on a role in the board's audit committee.

Expressing his perspective on the matter, Steinberg stated, "Etsy has a highly differentiated position in the e-commerce landscape and a uniquely attractive business model, supported by a distinctive and engaged community. We became a sizable investor in Etsy, and I am joining its board because I believe there is an opportunity for significant value creation."

In response to this development, Etsy's stock surged by 8% in afternoon trading, slightly scaling back from earlier gains that reached as high as 14.2%. If the trend continued, it would mark the best one-day gain since a 9.2% climb on July 11.

The acquisition of Elliott's stake occurred in recent months, as the fund's disclosure of equity holdings in the third quarter did not include Etsy shares. Etsy Chairman Fred Wilson emphasized that Steinberg's appointment reflects their ongoing commitment to diversifying perspectives and expertise on the Etsy Board.

Currently, Etsy boasts a board with 10 members. Over the past three months, the company's stock has witnessed an 18.6% increase, yet it has experienced a notable 48.5% decline over the last 12 months. This contrasts with the S&P 500 index, which has rallied by 18.7% over the past year.

CEO Josh Silverman, speaking at an investor conference in December, acknowledged a slowdown in business since the post-pandemic boom. He mentioned that people seem to have had their fill of buying things and are now directing their spending primarily towards dining out and travel. The impact of inflation and the cessation of government subsidies has also contributed to a decrease in overall spending.

Despite these challenges, Silverman highlighted that Etsy has grown to be about two and a half times larger than its pre-pandemic size. The company currently boasts more active buyers than it did at the peak of the pandemic. This suggests that, while facing headwinds, Etsy continues to navigate the evolving landscape of e-commerce and consumer behavior.

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