After Spending $1.6 Billion on Depop, Etsy (ETSY) Acquires Brazilian Marketplace for Handmade Items Elo7 for $217 Million in Cash

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Etsy (NASDAQ: ETSY) announced today it will spend $217 million in cash to acquire Elo7, a Brasil-based marketplace for handmade and unique items.

Elo7, which ranks as a top 10 e-commerce platform in Brazil, is focused on facilitating buying and selling of about 8 million creative items. The marketplace hosts 1.9 million active buyers with about 56,000 active sellers.

“Elo7 is the ‘Etsy of Brazil,’ with a purpose and business model similar to our own. Following our recent agreement to purchase Depop, we’re excited to bring another unique marketplace into the Etsy family. This transaction will establish a foothold for us in Latin America, an underpenetrated ecommerce region where Etsy currently does not have a meaningful customer base. We look forward to welcoming Elo7’s talented leadership team and employees to the Etsy family,” said Josh Silverman, CEO of Etsy.

Once the transaction is closed, the company will operate as a standalone company run by its existing leadership team.

“Etsy has always been an inspiration and a reference for us, and we’re excited to continue our growth journey as part of Etsy – a company whose mission and culture so closely match our own. We’re looking forward to leveraging Etsy’s product and marketing expertise to help the Elo7 marketplace, community and team achieve our full potential in Brazil,” Carlos Curioni, Elo7’s CEO said.

Earlier this month, Etsy announced it is buying an online Gen Z-focused marketplace Depop for $1.625 billion consisting primarily of cash.

Stifel analyst Scott Devitt reiterated a “Buy” rating and a $205.00 per share target on ETSY following the Depop acquisition.

“We view the transaction favorably and believe Etsy is well positioned to support further growth and platform improvements at Depop. Over time, we see the opportunity for take rate expansion on the Depop platform as additional seller services (shipping, payments, advertising) are potentially layered in. Etsy has seen success in the Reverb business since acquiring the platform in 3Q:19. Since the time of the acquisition, Reverb’s gross margin has expanded to 53% from 33% and the platform’s GMS per marketing dollar has expanded from $20 to $27. We expect Etsy will employ similar strategies following its acquisition of Depop. The transaction deepens Etsy’s penetration in the fast growing apparel resale category as well as among the core Gen Z demographic. In addition, this acquisition further validates the resale category” he said in a brief note.

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