Etsy announced it has replaced its CEO and is cutting 8 percent of its job force in an attempt to cope with slowing sales.
According to Bloomberg Technology, the online retailer’s shares fell as much as 21 percent after the announcement, which named director Josh Silverman as its new chief executive officer, replacing Chad Dickerson. Dickerson, who led the company for six years, will also step down as chairman and be replaced by Union Square Ventures Co-Founder Fred Wilson, a longtime investor in the company. Etsy also plans to eliminate 80 jobs.
This news comes after Black-and-White Capital LP, which owns over two million shares of Etsy, released two letters asking for a number of changes, including a request for the company to look into the possibility of a sale. With operational improvements, Black-and-White believes Etsy could approach $30 per share; if it was sold today, it could be valued at $15.50 per share.
The letters also addressed Black-and-White’s growing concern over Etsy’s shares falling 33 percent since its IPO in April 2015, as well as a number of critical issues — including a steep deceleration of gross merchandise sales (GMS) growth; poor corporate governance, including the need to immediately separate the chairman and CEO roles and the necessity of exploring strategic alternatives in order to maximize value for all shareholders.
In its announcement, Etsy also reported first-quarter revenue of $96.9 million, missing analysts’ average estimates. Though sales gained 18 percent, it was the company’s fourth straight period of slowing growth.
Yet Silverman sidestepped a question on a conference call about why he thinks Etsy should not sell itself. There’s a “tremendous opportunity for Etsy; it’s only begun to tap [into] a very bright future,” he said. As CEO, he’ll be focused on driving more traffic to the marketplace, getting visitors to actually spend money and increasing loyalty to Etsy.
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