Should eBay Buy Etsy? Analysts Say Companies Could Make Compelling Combo
Piper Sandler analyst Anna Andreeva is causing a stir with suggestions that an eBay and Etsy merger could be an "elegant solution" to growth struggles in a new report musing on the possibility of a compelling combo.
Clark Schultz
Citing Etsy's need for frequency, data, and scale that eBay can provide, as well as eBay's investments in AI, Andreeva says she believes together to companies could reach a buyer base of about 60% the size of Amazon's.
"With EBAY's scale, if ETSY grew, value would likely be untapped. Given EBAY's 134M active buyers, we estimate a pro forma buyer base would be ~174MM, or ~60% of the AMZN buyer base."
The report goes on to suggest there are opportunities for synergies between Etsy and eBay due to a strong seller overlap and that, while the likelihood of an outright transaction is still relatively low, an all-stock transaction could lead to a combined pro forma eBay being worth $85 per share.
So is there anything substantive to this report or is it just wishful thinking with maybe a little hope for an Etsy stock price bump on the side?
On paper, Etsy could be an attractive acquisition for eBay, especially if any potential deal kept Etsy-owned subsidiaries Depop and Reverb included rather than spinning them off separately.
eBay CEO Jamie Iannone has spent the last 5 years building what he calls his "enthusiast buyer focus vertical strategy" introducing new experiences and initiatives centered around categories like luxury fashion and handbags, trading cards, sneakers, jewelry and watches, and car parts and accessories.
However, that narrowly focused strategy has not delivered the active buyer and GMV growth eBay had hoped for, leading Iannone to pivot to a wider focus including consumer to consumer (C2C) and one of a kind/non-new in season business that has historically been key to eBay's success.
Liz Morton
That greater focus on C2C and unique items that appeal to enthusiasts could be where Etsy may have value to bring to the table.
Depop's C2C fashion segment would fit well with eBay's own pre-loved clothing initiatives and have the benefit of knocking out a competitor, especially in the UK where this category is particularly important to eBay.
Reverb could bring a wider depth and breadth of inventory in the musical instruments and gear categories, which may be a good next "focus vertical" for eBay and they also have existing relationships with brands for their outlet store that could benefit eBay as well.
Liz Morton
And Etsy's core handmade and vintage categories could form their own enthusiast vertical either kept as a stand alone site or highlighted with its own landing page and experience within the eBay site.
Not to mention many Etsy sellers say the platform looks more and more like eBay every day with the number of Ali Express dropshippers who are allowed to continue to flood the site despite policies against the practice.
If Etsy can't (or won't) enforce policies to keep their site truly for handmade and vintage items, maybe they would be better off doing away with the pretense and simply folding into a larger marketplace.
Liz Morton
While eBay has previously sold off other large, general marketplaces owned or had stakes in like GittiGidiyor in Turkey or FlipKart in India, in recent years they've also acquired several smaller more niche marketplaces that fit with their enthusiast focus vertical strategy and/or bring important tech or talent into the company.
For example, eBay bought TCGPlayer in 2022 and Goldin in 2024 for trading cards and collectibles.
They also bought NFT marketplace KnownOrigin in 2022 and, while they have shut down the public facing operations, eBay's most recent privacy policy update makes it clear they are still leveraging the underlying tech and talent to develop digital authentication and product passports on the blockchain.
Liz Morton
And just last month, eBay acquired auto auction site Caramel that brings in new features to help streamline registration and other paperwork associated with car sales.
Liz Morton
In that sense, acquiring Etsy could be in line with eBay's M&A profile over the last few years - but at a much larger scale and price tag compared to those examples.
Would eBay shareholders have the stomach for such a large acquisition and if so, does current eBay leadership have what it would take to execute it well?
The due diligence failures, business unit integration missteps, and ongoing labor troubles at TCGPlayer don't bolster confidence in eBay's ability to pull off a major acquisition like this - not to mention previously raised concerns about anticompetitive conduct could be exacerbated by such a deal and garner renewed attention from new FTC leadership.
Liz Morton
And if the FTC doesn't take notice, the Department of Justice might, as eBay is still under independent compliance monitoring (with a focus on M&A due diligence and risk) as part of their deal to avoid further criminal prosecution regarding the 2019 cyberstalking scandal in which eBay security employees harassed and intimidated journalists in an effort to influence their reporting and out an anonymous source.
Liz Morton
For all those reasons and more, I believe it is unlikely eBay will be looking to acquire Etsy any time soon - but it's an interesting thought experiment, especially considering eBay's reported recent meeting with Benchmark and whispers I've been hearing about potential venture capital interest in something that may involve eBay.
What do you think - should eBay acquire Etsy? Let us know in the comments below!
