Why Etsy Shares Are Exploding

By Chris Lange Updated Jan 11, 10:21PM EST · Published Jun 14, 10:16AM EDT

Why Etsy Shares Are Exploding — © Thinkstock

Shares of Etsy, Inc. (NASDAQ: ETSY), an e-commerce website focused on handmade or vintage items, climbed Thursday after the company announced that it would be revising its seller transaction fee. In light of the changes to the fee structure, Etsy upped its guidance as well, and investors responded positively to the news, sending the shares up more than 28% in early trading.

Starting July 16, the transaction fee charged when a seller makes a sale will rise to 5% from 3.5%, and it will also apply to the cost of shipping. This revised fee structure will enable Etsy to make further investments in marketing to attract buyers, enhance customer support, and drive product innovation.

As a result of these changes to the fee structure, Etsy is revising its 2018 financial guidance. The company now sees gross merchandise sales (GMS) growth in the range of 16%-19%, compared with prior guidance of 16%-18%, and revenue increase in the range of 32%-34%, compared with prior guidance of 22%-24%.

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There are consensus estimates calling for $0.44 in EPS and $543.98 million in revenue for the 2018 fiscal full year.

Josh Silverman, Etsy chief executive officer, commented:

Empowering creative entrepreneurs is at the heart of Etsy’s mission to keep commerce human. Our 2 million active sellers have individual business goals and aspirations, and we want to support them no matter where they are on their journey. By listening to the needs of our sellers, we designed our new subscription packages with a combination of tools to help them succeed at each phase of their business life cycle.

Shares of Etsy closed Wednesday at $32.99, with a consensus analyst price target of $31.60 and a 52-week range of $13.42 to $34.22. Following the announcement, the stock climbed $9.27, or 28.1%, to $42.23 in trading on the Nasdaq Stock Market in New York Thursday. More than 7.5 million shares had traded hands as of 10 :13 a.m., more than three times the daily volume.

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About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics. Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications. A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.