Etsy Inc (NASDAQ:ETSY) wasn’t having the best year up until Monday. Down 5.3% for the year through May 11, ETSY stock soared Tuesday after two investment firms — TPG Group Holding Advisers Inc and Dragoneer Investment Group LLC — announced a joint 8% stake in the artisanal marketplace.
The disclosure bid ETSY stock up to the tune of 24% Tuesday, sending it back to levels not seen since Barack Obama was still in office.
Etsy recently appointed Josh Silverman to CEO during its first-quarter earnings report, which revealed a company in desperate need of growth. Black-and-White Capital LP, an activist hedge fund with a 2% stake in the creative commerce platform, called on Etsy to explore a sale to bring growth back to the company.
Black-and-White noted Etsy’s “historical pattern of ill-advised spending,” and doubled down: “We are fully prepared to take any actions we believe are necessary to protect the best interests of all Etsy shareholders.”
Shares of ETSY wafted up 6% on the potential of a sale earlier this month. Today’s move is at least in part an extension of that. TPG, whose stake in Etsy is 4.3%, said that it has “contacted representatives of Etsy to offer to engage in discussions regarding strategic alternatives.”
And now it appears that Silverman is at least mulling the comments made by both Black-and-White and TPG:
“We are now reviewing our strategic and operational plans to ensure Etsy is focused on the most value-enhancing near- and long-term opportunities. We will prudently invest in areas that will deliver the greatest returns. At the same time, we see significant opportunities to scale our marketplace business model and drive efficiencies. In everything we do, we will strive for operational excellence and focused execution. I am encouraged by what I have seen and heard from our employees, sellers, buyers, and shareholders. I’m excited to build on Etsy’s solid foundation while increasing our focus on areas where we can do better. We look forward to providing additional details when our review is completed.”
How those “strategic” changes will affect the fundamental case for ETSY stock has yet to be seen, but we’ll likely know more on or before Aug. 1, when Etsy next reports earnings.
John Kilhefner is the deputy managing editor of InvestorPlace.com. He does not hold a position in any of the aforementioned securities. Follow him on Twitter at @jkilhefner.
