Can Anything Save Etsy?

Core Viewpoint - Etsy is facing significant challenges in the e-commerce marketplace, with declining sales and a loss of investor confidence following disappointing earnings reports [1][2][4]. Group 1: Financial Performance - Etsy's gross merchandise sales (GMS) fell by 6.5% to $2.8 billion, continuing a trend of declining business [5]. - Active sellers decreased by 11.3$1 billion impairment on the value of Depop and Elo7 in 2022, indicating poor performance of acquired brands [9]. - Despite Depop's GMS growth of 32% in 2024, the overall acquisition strategy has been deemed a failure, distracting from the core business [10]. Group 3: Seller Dynamics - A significant exodus of sellers is evident, with a 23% decline over the past year, which poses a risk to the marketplace's viability [11]. - The increase in seller fees has contributed to the decline in sellers, as there has been no corresponding increase in sales [12][13]. - Concerns have been raised about brand dilution due to the introduction of non-handmade goods, which may compromise Etsy's core identity [14]. Group 4: Future Prospects - For Etsy to recover, it must return to GMS growth and increase active sellers, addressing structural problems in the business [15]. - The company is seen as a potential target for activist investors, with Elliott Management owning 13% of the company but struggling to effect change [16]. - A change in management or a strategic partnership may be necessary for a turnaround, as the brand's relevance continues to decline [18].