Etsy, Inc. (NYSE:ETSY) stock surged Thursday after the company paired a $1.2 billion Depop divestiture with a fourth-quarter earnings beat.

The rally was likely magnified by elevated short interest, with 21.27% of the public float sold short, signaling substantial bearish positioning that may have fueled a squeeze.

The company reported fourth-quarter earnings per share of 92 cents, beating the analyst consensus estimate of 85 cents.

Quarterly sales of $881.64 million (+6.6% year-over-year excluding Reverb) came in slightly below the Street estimate of $884.90 million.

On an as-reported basis, including Reverb’s fourth-quarter 2024 revenue of $24.9 million, consolidated revenue was up 3.5% Y/Y.

Quarterly Metrics

For the Etsy marketplace, GMS was $3.29 billion, up 0.1% Y/Y, and down 1.0% on a currency-neutral basis.

GMS transacted on the Etsy App grew 6.6% Y/Y, and represented approximately 46% of GMS.

The take rate reached 24.5%, with revenue growth driven by continued strong consolidated on-site ads performance.

Active buyers declined 3.4% year-over-year to 86.5 million, while active sellers decreased 1.5% to 5.6 million.

Gross profit gained 1.5% to $644.09 million.

Adjusted EBITDA in the quarter under review was $222.46 million (down 11.2%), with an adjusted EBITDA margin of approximately 25.2% (down 420 bps).

Etsy ended the quarter with $1.8 billion in cash and cash equivalents and short- and long-term investments.

Under Etsy’s stock repurchase program, during the quarter, Etsy repurchased an aggregate of approximately $133 million, or 2.3 million shares, of its common stock.

Etsy Sells Depop

On Wednesday, Etsy announced an agreement to sell Depop to eBay Inc. (NASDAQ:EBAY) for $1.2 billion in cash. The sale is currently expected to close in the second quarter of 2026, subject to certain closing conditions.

Etsy said it plans to use the proceeds from the deal for general corporate purposes, continued share repurchases, and investments in its core marketplace.

Etsy will continue to own and operate Depop through such time as the transaction is completed, with Depop’s financial results classified as discontinued operations on Etsy’s consolidated financial statements for both current and prior periods beginning in the first quarter of fiscal year 2026.

Outlook

Etsy projects fiscal first-quarter 2026 GMS of $2.38 billion-$2.43 billion and an adjusted EBITDA margin of roughly 28%-30%.

The company expects slight Y/Y growth in fiscal 2026 GMS, with positive year-over-year comparisons in each quarter of 2026 and an adjusted EBITDA margin roughly consistent with first-quarter 2026 guidance.

Elevated Short Interest

The company has a short float of 14.69 million shares, representing 21.27% of its publicly traded float of 69.06 million, indicating a relatively high level of short interest among investors betting against the stock.

ETSY Price Action: Etsy shares were up 21.70% at $53.60 during premarket trading on Thursday, according to Benzinga Pro data.

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