What Happened:
Shares of online marketplace Etsy (NASDAQ:ETSY) jumped 10.9% in the morning session after CNBC reported that Elliott Investment Management has built a 13% in the company. This move is notable given Elliott's track record for activist campaigns, often bringing about significant changes in targeted companies, focusing on aspects like improving asset monetization, expense efficiency, and stock buybacks.
Following the report, Etsy announced the appointment of Marc Steinberg, Partner at Elliott Investment, to its Board, effective February 5, 2024. Marc Steinberg oversees public and private equity investments across various sectors, including technology, media, and telecommunications. He serves on the boards of directors of Pinterest, Nielsen Holdings, Syneos Health, and Cubic. Steinberg added, "We became a sizable investor in Etsy and I am joining its board because I believe there is an opportunity for significant value creation."
Recall that late in 2023, Elliott built a sizable position in Consumer Internet company Pinterest (NYSE:PINS) as well, with Steinberg joining the Board there shortly thereafter.
Is now the time to buy Etsy? Access our full analysis report here, it's free.
What is the market telling us:
Etsy's shares are very volatile and over the last year have had 16 moves greater than 5%. But moves this big are very rare even for Etsy and that is indicating to us that this news had a significant impact on the market's perception of the business.
The previous big move we wrote about was 29 days ago, when the company dropped 5.6% as stocks experienced a second consecutive day of decline, accompanied by an increase in yields. The 10-year Treasury yield rose past the 4% mark for a brief moment. The 2-year yield rose to 4.38%. This may be a sign that there is a hint of uncertainty and questions about whether the broader market is positioned too optimistically or whether the market has "gotten ahead of itself". Other than this, there is nothing specific to directly explain the downward move.
As a reminder, the driver of a stock's value is the sum of its future cash flows discounted back to today. With lower interest rates, investors can apply higher valuations to their stocks. No wonder so many in the investment community are optimistic about 2024. We at StockStory are not macro prognosticators. Instead, we think there are opportunities to pick market-beating stocks in any macro backdrop. We remain steadfast in our view that it's best to own high-quality companies with margins of safety over the long term in any market.
Etsy is down 11.4% since the beginning of the year, and at $71.86 per share it is trading 51.5% below its 52-week high of $148.20 from February 2023. Investors who bought $1,000 worth of Etsy's shares 5 years ago would now be looking at an investment worth $1,321.
Do you want to know what moves the stocks you care about? Add them to your StockStory watchlist and every time a stock we cover moves more than 5%, we provide you with a timely explanation straight to your inbox. It's free and will only take you a second.