Etsy: Elliott's Stake Does Little to Change Our Opinion Despite Positive Market Reaction; Shares Cheap

Wide-moat Etsy announced the appointment of Marc Steinberg to its board of directors after activist investor Elliott Management acquired a sizable (13%) stake in the company. We don't expect to alter our $145 fair value estimate nor our Standard Morningstar Capital Allocation Rating on the news, as we see little disconnect between the firm's current strategy and Elliott's proposed emphasis on improving the customer experience and accelerating growth. As we see it, efforts to cull counterfeit listings and the firm's ongoing platform investments are designed to address those specific pillars directly.