Online craft and vintage goods marketplace Etsy Inc (NASDAQ:ETSY) has had a rough ride since its 2015 IPO. What initially looked like Amazon.com Inc.’s (NASDAQ:AMZN) hipster cousin instead became a confusing mess-of-a-business with very few votes of confidence on Wall Street. Etsy’s overall idea — an online marketplace where crafters could sell their wares — was a good one, however a lack of focus together with lavish corporate spending led to the company drifting off course and ETSY stock heading nearly 50% lower.

Now, with a new CEO and pressure to make necessary changes, ETSY stock is actually starting to look pretty promising.

Taking Care of Business

The Etsy of days past was a worrisome organization. Management created frivolous positions that oversaw things like instilling company values and waste management, all of which did nothing to increase revenue.

Then there was the company’s decision to move into ultra-hip Brooklyn offices that boasted a view of the city and several cool — but entirely unnecessary — perks. All of that might be fine for a company like Apple Inc. (NASDAQ:AAPL) that has quite a bit of cash to burn, but Etsy had yet to turn a profit.

However, in May, Josh Silverman took over as CEO and the fat-trimming began. When Silverman started, 80 of Etsy’s employees packed their bags. A month later, Silverman eliminated 15% of the company’s workforce in an effort to reduce costs and streamline the organization.

In three months, Silverman has helped propel ETSY stock nearly 30% higher. Silverman taking over marked a turning point for Etsy as an organization, and it also gives investors a reason to reconsider ETSY stock. There is definitely a place in the market for a business like Etsy, it’s just a question of whether or not Etsy can remain focused on its future plans, rather than getting caught up in the trappings of a hot new company.

Bring it Back to the Marketplace

The other thing that Etsy is doing differently these days is returning focus to its primary business — providing a buying and selling platform. The company is focused on improving its search functions and using customer data to offer personalized product recommendations.

On Monday, the company named Mike Fisher, co-founder of AFK Partners, as Etsy’s new Chief Technology Officer. Fisher has said he plans to increase the company’s machine learning capabilities in order to improve searches and better classify the wide range of goods offered on the site. Fisher also plans to cut down on Etsy’s in-house tech development, opting instead to buy technology that’s already been created and tested.

The addition of Fisher was also praised by Wall Street as a major step forward for ETSY stock. Together with Silverman, Fisher is working to cut out unnecessary functions, finally turn a profit and ensure that Etsy has ways to grow its business in the future.

Here Come the Activists

Another big reason investors are taking notice of ETSY stock once again has been the fact that it is now drawing attention from activist investors. So far, TPG Capital, Dragoneer and Black-and-White Capital have all taken a stake in Etsy. That’s good for ETSY investors because it means the company will be under a great deal of pressure to up its game and eek out a profit — and soon.

There has also been chatter about a possible sale, especially from Black-and-White Capital, which said it was planning to push for a sale.

Etsy Earnings

On Thursday, Etsy is due to report its second-quarter earnings. Those results will likely have a major impact on ETSY stock because they will give investors a clearer picture of where the company is headed.

On one hand, financials that show improvement in Etsy’s core business could indicate that the company is on the upswing. However, the more likely scenario is that investors will be scouring the release for any indication that the business might go up for sale.

Silverman has already said that he would consider any takeover offers, but so far there haven’t been any suitors.

The Bottom Line

Whether Etsy gets its act together or not, ETSY stock is looking promising for investors. The crafty company looks to be on the path to profits, but if things continue to deteriorate the company would make for an enticing acquisition for a behemoth like Amazon, which has been building out its own craft marketplace.

There has also been some chatter about Wal-Mart Stores Inc (NYSE:WMT) becoming a potential suitor as the discount chain improves its e-commerce portfolio. Either way, investors win.

As of this writing, Laura Hoy was long AMZN.