Stock Story -
What Happened: Shares of online marketplace Etsy (NASDAQ:ETSY) jumped 5.1% in the afternoon session after the Bureau of Labor Statistics provided a revised inflation reading for December 2023, which came in lower than expected (+0.2% m/m versus the prior reading of +0.3%). This further supports the narrative that inflation is cooling, likely giving the Fed more reasons to start cutting rates in 2024.
Also, stocks continued to rally as the Nasdaq rose 1.2% and the S&P 500 gained 0.57% to end another strong week of earnings with positive results from most of the big tech stocks that reported so far this season. Notably, Meta (NASDAQ:META) reported strong top and bottom-line beats, hinting at a potential rebound for the advertising sector in 2024. Cloudflare (NYSE:NET) also reported solid earnings with guidance for sustained growth momentum in 2024, further boosting the market's optimism toward software stocks, especially those with cloud and AI capabilities.
Overall, it was also a strong week for equities, with the S&P 500 breaking past the 5,000 level for the first time as the market continued to maintain the strong momentum from the last quarter of 2023.
As a reminder, the driver of a stock's value is the sum of its future cash flows discounted back to today. With lower interest rates, investors can apply higher valuations to their stocks. No wonder so many in the investment community are optimistic about 2024. We at StockStory remain cautious, as following the crowd can lead to adverse outcomes. During times like this, it's best to own high-quality, cash-flowing companies that can weather the ups and downs of the market.
Is now the time to buy Etsy? Find out by reading the original article on StockStory.
What is the market telling us: Etsy's shares are very volatile and over the last year have had 16 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 8 days ago, when the company gained 10.9% after CNBC reported that Elliott Investment Management built a 13% in the company. This move is notable given Elliott's track record for activist campaigns, often bringing about significant changes in targeted companies, focusing on aspects like improving asset monetization, expense efficiency, and stock buybacks.
Following the report, Etsy announced the appointment of Marc Steinberg, Partner at Elliott Investment, to its Board, effective February 5, 2024. Marc Steinberg oversees public and private equity investments across various sectors, including technology, media, and telecommunications. He serves on the boards of directors of Pinterest (NYSE:PINS), Nielsen Holdings, Syneos Health, and Cubic. Steinberg added, "We became a sizable investor in Etsy and I am joining its board because I believe there is an opportunity for significant value creation."
Recall that late in 2023, Elliott built a sizable position in Consumer Internet company Pinterest (NYSE:PINS) as well, with Steinberg joining the Board there shortly thereafter.
Etsy is down 3.7% since the beginning of the year, and at $78.09 per share it is trading 45.1% below its 52-week high of $142.26 from February 2023. Investors who bought $1,000 worth of Etsy's shares 5 years ago would now be looking at an investment worth $1,469.