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

Feb 19 (Reuters) - Etsy ETSY.N shares surged about 18% in premarket trading on Thursday, after the online marketplace sold off its Gen Z-focused fashion resale platform Depop to EBay EBAY.O, 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 focus on its core business as it pushes a turnaround under its new CEO, while grappling with inflation-hit shoppers and strong competition from e-commerce heavyweights such as Amazon.com AMZN.O.

Etsy had sold its online music gear marketplace Reverb to private investors in 2025.

"A streamlined portfolio positions Etsy for a return to profitable growth," Jefferies analysts said in a note.

The sale of Depop, which Etsy acquired in 2021 for $1.63 billion, is expected to close in the second quarter of 2026. The company said it would continue to own and operate the brand till then.

Etsy also reported revenue of $881.63 million for the fourth quarter, missing analysts' average estimate of $884.90 million, according to data compiled by LSEG.

Its quarterly adjusted earnings before interest, taxes, depreciation and amortization came in at $222.5 million, compared with the estimate of $213.45 million.

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.

The company forecast first-quarter GMS to be between $2.38 billion and $2.43 billion, less than the $2.8 billion it reported a year ago. But for full-year 2026, it expects GMS to grow slightly, helped by marketing initiatives.