By Dhirendra Tripathi
Investing — Etsy (NASDAQ:) shares were up in Wednesday’s premarket as traders cheered its attempt to extend its presence in the fast-growing resale space for apparels with its $1.62 billion deal to buy Depop, a privately-held marketplace for unique fashion.
Depop is the 10th most visited shopping site among Gen Z consumers in the U.S.
Its mostly under 26 users were the lure for Etsy. A release by Etsy said young consumers are adopting second-hand fashion faster than any other audience.
The 2020 gross merchandise sales and revenue of the London-headquartered company were approximately $650 million and $70 million, respectively, each increasing over 100% year-over-year.
Depop is expected to be accretive to Etsy’s top line growth rate and modestly dilutive to Etsy’s adjusted EBITDA margin.
Etsy’s consolidated revenue for the first quarter ended March 31 was $550.6 million, up 141.5% versus the same period of 2020.
Non-GAAP adjusted EBITDA margin of 33% was up 900 basis points compared to the first quarter of 2020. One basis point is one-hundredth of a percentage point.
The transaction is expected to close during the third quarter of 2021.
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