Elo7 sale ‘doesn’t move the needle much’ for Etsy, says BTIG

After Etsy disclosed that it has entered into a quota purchase agreement with Enjoei S.A. to divest its Elo7 subsidiary and did not disclose terms, BTIG noted that Enjoei had a market cap of $260M before today’s 15% rise in the stock price and infers that the purchase price was “well below” the $217M Etsy paid for Elo7 in 2021, “likely less than 25% of what it paid.” While stating the outcome is “disappointing” given that Elo7 “was a very natural extension for Etsy and Brazil remains a large and under-penetrated e-commerce market,” the firm also says Elo7 “was too small to move the needle and was a drag on margins.” Asking if this may mean Etsy’s “House of Brands strategy is over,” the firm answered its own question by stating it doesn’t think the company “has forsaken acquisitions permanently.” BTIG has a Buy rating and $108 price target on Etsy shares.