Is Etsy stock a buy after $1.6B Depop acquisition?

Etsy Inc (NASDAQ: ETSY) said on Wednesday it will buy Depop for $1.62 billion. Depop is a fashion resale app that is focused primarily on Gen Z. Shares of the company closed about 6% up on Wednesday.

Gina Sanchez’ remarks on CNBC’s “Trading Nation”

The news comes after a significant hit to Etsy in the past three months as COVID-19 restrictions started to ease, decelerating online shopping and pushing the stock down by 26%. On CNBC’s “Trading Nation”, Gina Sanchez (chief market strategist at Lido Advisors and CEO of Chantico Global) said:

Sanchez further highlighted that the Depop acquisition will help drive long-term growth for Etsy as it targets lower demographic (26-year-olds on average), but was unlikely to pay off in the next couple of quarters.

The expert further highlighted that despite the pullback in recent months, Etsy still exchanges hands at close to double the valuation of the XRT retail ETF. She said:

Mark Newton seconds Sanchez’ on CNBC’s “Trading Nation”

President of Newton Advisors, Mark Newton, echoed Sanchez’ remarks in the same interview with CNBC, declaring $181 as a strong resistance that Etsy will find challenging to break above. He said:

In the retail space, Newton saw MarineMax as a much better buying opportunity after the recreational boating retailer slipped about 30% in the past few weeks. Currently, at $47.30 per share, the expert sees the stock jumping to mid-to-high $50s in the upcoming weeks.

Etsy closed the regular session at $175 per share on Wednesday. It opened lower at $171 on Thursday morning and is currently exchanging hands at $166.67. At the time of writing, the American eCommerce company is valued at $21.49 billion and has a price to earnings ratio of 49.35.