Online crafts marketplace Etsy Inc. (ETSY, Financial) soared to a record high on Thursday after announcing it is going to increase seller transaction fees.
The New York-based company, whose platform connects consumers with artisans and crafters of products ranging from jewelry and accessories to home décor and art, said it is increasing the base rate, which is the percentage of a sale it keeps for itself, from 3.5% to 5%. The change will be effective on July 16.
Etsy Chief Financial Officer Rachel Glaser said the fee increase, which will also apply to shipping costs, will enable the company to make investments in marketing, customer support and product innovation.
“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,” she said.
As a result of the increased fees, Etsy raised its guidance for the year. It now expects revenue growth of 32% to 34%, which is a significant change from its previous forecast of 22% to 24% growth.
The company also introduced new optional subscription packages and tools for its independent vendors. According to CEO Josh Silverman, the goal of the packages is to support sellers at different stages of growth in order for them to succeed.
“Empowering creative entrepreneurs is at the heart of Etsy’s mission to keep commerce human,” he said. “Our two million active sellers have individual business goals and aspirations, and we want to support them no matter where they are on their journey.”
The first package, which will roll out in July for an initial rate of $10 a month, will be called Etsy Plus. It is geared toward sellers looking to jumpstart their growth. In 2019, Etsy Premium will be available for larger, more established vendors.
Etsy’s shares, which rose as much as 35% on Thursday to reach a high of $44.78, closed at $41.65. The momentum carried over into Friday morning, with the stock up nearly 2% at $42.42. The stock has traded as low as $13.42 per share in the past 52 weeks.
GuruFocus estimates the stock has climbed approximately 107% year to date.
Several gurus see value in Etsy. While Jim Simons (Trades, Portfolio)’ Renaissance Technologies has the largest stake in the company with 6.6% of outstanding shares, Steven Cohen (Trades, Portfolio), Joel Greenblatt (Trades, Portfolio), Chuck Royce (Trades, Portfolio) and Paul Tudor Jones (Trades, Portfolio) all expanded their holdings in the first quarter. Only Lee Ainslie (Trades, Portfolio) trimmed his position.
Disclosure: No positions.
