Etsy Shares Fall Following Workforce Reduction Announcement
Etsy, the popular online marketplace, recently announced a significant restructuring plan that includes laying off 11% of its workforce, causing a notable drop in its stock prices. This move will reduce Etsy’s headcount by approximately 225 workers, bringing the total number of employees down to around 1,770, aligning with the company’s workforce size in early 2022.
Etsy’s shares experienced a downturn following the announcement, reflecting investors’ reactions to the news. The company’s shares fell by more than 5% after the restructuring plan was revealed in a Securities and Exchange Commission (SEC) filing. The stock price dropped further to about 7%, marking a significant impact on the company’s market valuation.
Etsy’s CEO, Josh Silverman, communicated the decision to employees, citing the challenging macroeconomic and competitive environment as key factors necessitating this decision. He noted that while the Etsy marketplace has more than doubled in size since 2019, gross merchandise sales have remained essentially flat since 2021. Coupled with growing employee expenses and the need to adjust for current realities, the company saw the workforce reduction as a necessary step.
The layoffs are part of Etsy’s efforts to streamline operations and reduce costs. The company expects to incur costs of $25 million to $30 million, primarily in the current quarter, mainly due to severance payments, employee benefits, and other related costs.
The timing of the job cuts, just before the Christmas holidays, was acknowledged by Silverman as unfortunate. The departing employees will receive a minimum of 16 weeks’ pay, 12 months of COBRA health care coverage, and three months of career service support.
In addition to staff layoffs, Etsy announced that Chief Marketing Officer Ryan Scott would be stepping down at the end of December, though he will remain as an adviser until June. His role will be taken over by COO Raina Moskowitz, who will assume the new title of chief operating and marketing officer.
This development at Etsy reflects broader trends in the e-commerce industry, where companies are adjusting to post-pandemic market conditions and shifting consumer behaviors.
