Etsy Rallies 22% After $1.2B Depop Deal and 92¢ EPS Beat
Etsy posted Q4 EPS of $0.92, topping estimates by $0.07, with revenue of $881.6 million slightly below the $884.9 million forecast. The company agreed to divest Depop for $1.2 billion in cash; plans to use proceeds for buybacks and core marketplace investments, with 21.27% of its float sold short.
1. Q4 Financial Results
In the fourth quarter, Etsy delivered EPS of $0.92 versus the $0.85 consensus, while revenue came in at $881.6 million, just shy of the $884.9 million estimate. Gross merchandise sales on the Etsy marketplace rose 0.1% to $3.29 billion, with app transactions up 6.6% to roughly 46% of total GMS, and the take rate increased to 24.5%.
2. Depop Divestiture Details
The company agreed to sell Depop to eBay for $1.2 billion in cash, expected to close in the second quarter of 2026, with proceeds earmarked for general corporate purposes, continued share repurchases and investments in the core marketplace. Depop’s results will be classified as discontinued operations starting in Q1 2026 reporting.
3. Short Interest and Stock Reaction
Elevated short interest at 21.27% of the public float likely contributed to a 21.7% premarket stock rally, marking the largest one-day gain in nearly six years if gains hold through the session. Etsy repurchased $133 million of stock during the quarter, reflecting ongoing share buyback support.
4. Outlook and Capital Deployment
For Q1 2026, Etsy projects GMS of $2.38–2.43 billion and an adjusted EBITDA margin of 28–30%, while full-year GMS is expected to see slight year-over-year growth with margin consistency. The company finished the quarter with $1.8 billion in cash and investments, poised to fund strategic initiatives post-Depop sale.