Etsy’s stock rockets to highest-ever price, 2nd-biggest gain

It took more than three years, but Etsy Inc. shares have finally surpassed levels reached during their public debut, after the company raised its revenue outlook and its fee structure.

The stock ETSY, +26.19%  rocketed 28% in very active afternoon trade Thursday, putting it on track for the second-biggest percentage gain since the online craft marketplace went public on April 16, 2015. The biggest-ever rally was 30.6% on July 17, 2015.

Etsy shares traded at an all-time intraday high of $44.78 earlier in Thursday’s session. That was well above the previous all-time high of $35.74, which was seen on the stock’s first day of trade. Volume swelled to 23.6 million shares, compared with the full-day average of about 2.1 million shares.

Thursday’s rally completes a massive, multiyear U-turn. After closing the first day at $30.00, which was 88% above its IPO price of $16.00, the stock plunged to a record closing low of $6.36 on Feb. 9, 2016, which was 60% below its IPO price. Since then, it has run up by a factor of nearly seven.

Before Thursday’s open, Etsy raised its 2018 revenue growth guidance range to 32% to 34% from the range provided last month of 22% to 24%. The FactSet analyst consensus for 2018 revenue of $544.0 million implies a 23% rise from last year.

The gross merchandise sales growth outlook was increased to a range of 16% to 19% from a range of 16% to 18%.

Etsy said the increased guidance comes as it plans to increase the transaction fee it charges when a seller makes a sale. The fee was previously 3.5%, but will increase to 5.0% on July 16. The increase should help the sellers, Chief Financial Officer Rachel Glaser said, because it will help pay for increased marketing.

“Our revised fee structure will allow us to make more meaningful investments on behalf of our sellers while remaining what we believe is the best value for entrepreneurs looking to start, manage, and grow a creative business,” Glaser said. “We plan to increase our 2017 direct marketing spend by at least 40% in 2018, revamp our Etsy community platforms, and execute against an exciting product road map.”

The company also announced new seller subscription packages:

Etsy Standard

Access to the nearly 35 million active buyers in Etsy’s marketplace.

All the seller tools and services Etsy currently offers that help creative entrepreneurs start, manage and grow a business.

Etsy Plus, available July 2018

Access to everything in Etsy Standard

Advanced shop customization options

Targeted restock notifications

Discounts on branded packaging and promotional materials

Free or discounted custom web addresses

$5 monthly Promoted Listing credit and 15 free monthly listing credits

Etsy Premium (available August 2019)

Access to everything in Etsy Standard and Etsy Plus

Advanced management tools specifically designed for business owners with employees

Premium customer support

More details to be announced in the coming months

“Our two million active sellers have individual business goals and aspirations, and we want to support them no matter where they are on their journey,” said Chief Executive Josh Silverman. “By listening to the needs of our sellers, we designed our new subscription packages with a combination of tools to help them succeed at each phase of their business life cycle.”

Etsy’s stock has more than doubled so far this year, rallying 107%, while the Nasdaq Composite Index COMP, +0.85% has climbed 12% and the S&P 500 index SPX, +0.25% has tacked on 4%.

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