Activist Investors Are Coming for Etsy, A Threat to Its Business Model
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Activist Investors Are Coming for Etsy, A Threat to Its Business Model

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Elliott Management, a well-known investment management firm with an aggressive governance tactic, has acquired a significant stake in Etsy’s stock. According to CNBC, Elliott now holds around 13% of Etsy’s shares, making it the company’s largest investor after Vanguard and BlackRock.

Elliott’s Growing Influence on Etsy

The appointment of Marc Steinberg, an Elliot partner, to Etsy’s board of directors marks a significant development in the company’s history. As of February 5, Steinberg will join the 10-person board, bringing with him a wealth of experience and expertise.

Elliott’s History of Activist Investing

Elliott Management has a long history of activist investing, having restructured firms such as Enron, TWA, and WorldCom in its early years. However, over the past few decades, the firm has shifted its focus to the lucrative tech sector.

Recent Moves by Elliott

In 2020, Elliot acquired $2 billion worth of Twitter shares and nominated three directors to the company’s board, attempting to replace then-CEO Jack Dorsey. The firm has also engaged in a "turnaround" effort at Pinterest and encouraged Salesforce to implement harsh new policies for engineers and salespeople aimed at reducing headcount.

Etsy’s Challenges

Etsy finds itself battling multiple fronts as it tries to maintain its market share against low-cost Chinese retailers like Temu and Shein. The company has struggled to regain its footing after a pandemic-era boost in sales and revenue proved fleeting.

Recent Earnings Call Highlights

During Etsy’s most recent earnings call, CEO Josh Silverman admitted that Temu and Shein were driving up Etsy’s marketing expenditures. Additionally, outlets report that AI-generated junk is flooding Etsy, worsening the search experience on the platform.

Etsy’s M&A Strategy

In an effort to grow new lines of business, Etsy has made several acquisitions in recent years, including resale platform Depop, Brazil-based marketplace Elo7, and Reverb, a marketplace for new and used instruments. However, the company offloaded Elo7 just two years after acquiring it for $217 million.

Elliott’s Promise of Cost-Cutting

In light of Elliott’s growing influence on Etsy, the promise of steep cost-cutting drove the company’s stock up 10% this morning. Whether Elliott’s efforts will be successful remains to be seen, but one thing is certain: the activist investor is coming for Etsy.

What Does This Mean for Etsy?

The appointment of Marc Steinberg and Elliott’s growing influence on Etsy may signal a significant shift in the company’s strategy. With Elliot at the helm, investors can expect increased pressure on management to meet their demands and drive long-term value creation.

Will Elliott’s Activist Investing Tactics Pay Off?

Only time will tell if Elliott’s activist investing tactics will pay off for Etsy. However, one thing is certain: the company’s future looks uncertain as it battles multiple fronts in a fiercely competitive market.

What Does This Mean for the Tech Industry?

Elliott’s growing influence on Etsy and other tech companies may signal a new era of activist investing in the industry. As investors become increasingly focused on driving value creation, we can expect to see more companies facing pressure from activist investors like Elliott.

Conclusion

The appointment of Marc Steinberg and Elliott’s growing influence on Etsy marks a significant development in the company’s history. With Elliot at the helm, investors can expect increased pressure on management to meet their demands and drive long-term value creation. Whether Elliott’s efforts will be successful remains to be seen, but one thing is certain: the activist investor is coming for Etsy.

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Topics Covered in This Article

  • Activist investing
  • Elliott Management
  • Etsy
  • M&A strategy
  • Cost-cutting
  • Tech industry
  • Value creation

Related Keywords

  • activist investor
  • elliott management
  • etsy stock
  • m&a strategy
  • cost-cutting measures
  • tech industry news

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