It’s no secret that e-commerce is among the most exciting sectors in investing, but has Etsy’s latest acquisition sent it to the top?
E-commerce rules the world right now, and it seems like Amazon rules e-commerce. But even Jeff Bezos’s ‘king-of-kings’ couldn’t stop Etsy (NASDAQ: ETSY)when it tried.
And now, Etsy is building an empire of its own.
Etsy’s biggest-ever acquisition
Yesterday, Etsy announced that it is buying the secondhand fashion app Depop for $1.62 billion — mostly in cash. The ‘vintage’ e-commerce specialist seems like the perfect buyer for this savvy, Gen-Z-centric business, which lets people buy and sell used clothes through its online marketplace.
When you take a quick look at Depop’s mission statement and fundamentals, it’s no surprise that it is so highly favored by young consumers. It works very hard on its ethical brand image, focuses much of its marketing on environmental and socially responsible shopping, and has a savvy social media team that Elon Musk would be jealous of.
And now, Depop belongs to Etsy, which will be adding 30 million registered users across 150 countries to its arsenal of e-commerce wares. Although mergers and acquisitions are actually failures more often than not — as covered in a recent Insight for MyWallSt subscribers — there are lots to be optimistic about this deal.
Etsy will allow Depop to operate autonomously from its London HQ under its current management. By not tinkering with that winning formula, Depop can continue to operate as the “resale home for Gen Z consumers”, with Etsy providing any necessary capital for European expansion.
Although it’s early days and the deal is not expected to be closed until later this year, one cannot help but be excited about Etsy. It has already seen its stock more than double in the past 12 months thanks to a COVID-19 injection of business, and should this acquisition work out, it could massively boost its valuation once more.
MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in companies mentioned above. Read our full disclosure policy here.