Shares of Etsy (ETSY - Free Report) soared more than 30% in early morning trading Thursday after the online marketplace lifted its 2018 revenue guidance and announced a new subscription service aimed at helping merchants improve their visibility on the site.
Etsy is also raising the fee it charges when a merchant makes a sale to 5.0% from 3.5%, effective July 16. The company said it now expects 2018 revenue to add 32% to 34% from the prior year, up from its previous guidance range of 22% to 24% growth.
“Our revised fee structure will allow us to make more meaningful investments on behalf of our sellers while remaining what we believe is the best value for entrepreneurs looking to start, manage, and grow a creative business,” said CFO Rachel Glaser.
Etsy’s new subscription models could also provide top-line support for the e-commerce company geared toward independent sellers of artisan and creative products.
The subscription plans include Etsy Standard, a free package which gives sellers access to the tools Etsy already offers; Etsy Plus, which unlocks certain “advanced shop customization” features; and Etsy Premium, the top-end plan expected to debut in 2019.
Etsy Plus will launch in July and cost $10 per month through the end of the year on a month-to-month subscription basis. The subscription service will cost $20 a month in 2019.
“Both the pricing package and our investment plans were really developed with the input of our sellers,” said Kruti Patel Goyal, GM of seller services. “Etsy is only successful when our sellers are successful.”
Etsy’s updated guidance is likely to usher in more bullish analyst sentiment for the stock, which had already seen its fair share of positive activity heading into the day. Shares of the e-commerce platform were already up more than 60% so far this year, and analysts have been revising their forward-looking EPS estimates upward.
In fact, Etsy has witnessed seven revisions to its current- and next-year earnings estimates, with 100% agreement to the upside, over the past 60 days. That activity has lifted the Zacks Consensus Estimates for both of these periods by six cents. Positive earnings estimates have earned the stock a Zacks Rank #2 (Buy).
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