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Etsy's New Roster Of Execs, Potential Activist Shareholder Campaign Shake Things Up

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Etsy's New Roster Of Execs, Potential Activist Shareholder Campaign Shake Things Up
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Etsy Inc (NASDAQ: ETSY)'s earnings report on Tuesday was event-filled, but not necessarily for the better as shares were trading lower by more than 11 percent Wednesday morning.

Etsy reported earnings per share of $0.00 on revenue of $96.891 million, which fell short of the one cent per share and $98.4 million Wall Street analysts were expecting.

Beyond the headline number, Blake Harper of Loop Capital noted Etsy's revenues, adjusted EBITDA and non-GAAP earnings per share were all below consensus estimates by 2 percent, 33 percent, and 23 percent, respectively.

In fact, the analyst noted that every metric was short of expectations due to a "significantly slower" February along with weaker than expected bidding by Sellers for its Promoted Listings.

Management Shuffle

In conjunction with Etsy's report, the company announced Josh Silverman has been promoted from a member of the board to CEO, effective Wednesday. The outgoing CEO, Chad Dickerson, will also step down from the board and will serve as an adviser to the company until the end of the month.

Etsy's Chief Technology Officer John Allspaw will step down from his post and be replaced with Mike Brittain who will double as interim CTO and maintain his post as vice president of engineering.

Loop's Harper noted Silverman boasts the necessary experience from prior roles at eBay Inc (NASDAQ: EBAY) where he led the international expansion of its Shopping.com business.

Etsy's technology assets, large marketplace, and social mission should be able to attract top-tier candidates to fill vacant positions.

Activist Investor Campaign

Black-and-White Capital, an activist investor and 2 percent shareholder of Etsy, made its campaign against Etsy public on Tuesday. The activist investor is looking for Etsy to improve its GMS growth, operating efficiency, and other initiatives to boost shareholder value.

The analyst believes the new management team in place at Etsy should be "more amenable" to the activist investor's changes given its poor first quarter results.

Shares of Ety remain Buy rated with a price target lowered from $16 to $13.

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Latest Ratings for ETSY

DateFirmActionFromTo
Sep 2017DA DavidsonInitiates Coverage OnBuy
Jul 2017Morgan StanleyMaintainsEqual-Weight
May 2017CitigroupDowngradesBuyNeutral

View More Analyst Ratings for ETSY
View the Latest Analyst Ratings

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