Etsy is selling Depop to eBay at a markdown, in latest move to focus on basics. Both stocks are rallying.

By Bill Peters

Etsy says selling Depop will allow it to 'grow the Etsy marketplace in ways that matter most to our buyers and sellers'

Etsy's sales growth has slowed since the pandemic-era e-commerce boom.

Etsy on Wednesday said it was selling the online secondhand-clothing site Depop to eBay for around $1.2 billion, in an effort to focus more deeply on its main marketplace business.

The cash deal, set to close in the second quarter, comes as Etsy (ETSY) and other businesses still unwind from the boom in digital demand brought by the pandemic. Etsy, whose marketplace allows small businesses to sell things like arts, crafts and home goods, bought Depop in 2021, albeit for a higher price, at $1.6 billion.

Shares of eBay (EBAY) were up 5.8% after hours on Wednesday, helped by fourth-quarter results that topped expectations and a better-than-expected first-quarter outlook. Etsy's stock ran even higher, up 16.4% after hours.

Etsy, in a statement, noted Depop's massive popularity with millennials and Gen Z. It said the site last year had 7 million active buyers, and nearly 90% of them were under age 34. Etsy said it expects Depop to retain its name after the deal closes.

Etsy said selling Depop would allow it to "grow the Etsy marketplace in ways that matter most to our buyers and sellers." For eBay, it said, the sale would help the online auction site reach younger, fashion-conscious shoppers.

"These consumers are accelerating the shift towards circular fashion through social-driven shopping behaviors," eBay CEO Jamie Ianonne said on the company's earnings call on Wednesday, referring to the practice of making clothing last longer.

Etsy's sales growth has slowed since the pandemic-era e-commerce boom, and its stock, as of the close of trade, was down 14.3% over the past 12 months. More recently, it has grappled with the impact of tariffs and consumers navigating higher prices.

In recent years, it has sold off other e-commerce properties. Last year, it sold music-instrument marketplace Reverb, and in 2023 it sold Brazilian e-commerce site Elo7.

At a conference in December, Etsy executives expressed excitement for the secondhand clothing market, and said Depop had room to grow. But they said Depop had low awareness overall in the U.S., and noted their efforts to make it easier to list and discover items on the site.

"Most of the customers are casual sellers, reselling things from their closets," Kruti Patel Goyal, who was serving as Etsy's chief growth officer at the time and became CEO in January, said at that conference. "The speed to being able to get something from your closet onto the app really matters."

-Bill Peters

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02-18-26 2016ET