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BROOKLYN - Etsy, Inc. (NASDAQ:ETSY), the $6.28 billion market cap e-commerce company, today announced the pricing of $650 million in convertible senior notes due 2030 with a 1.00% interest rate in a private placement to qualified institutional buyers. According to InvestingPro data, the company operates with moderate debt levels and maintains strong cash flows to cover interest payments.
The e-commerce company also granted initial purchasers an option to buy up to an additional $50 million in notes. The transaction is expected to close on June 16, subject to customary conditions. With a healthy current ratio of 2.14x, Etsy demonstrates strong liquidity to meet its short-term obligations.
The notes will mature on June 15, 2030, with interest payable semiannually beginning December 15, 2025. The initial conversion rate is 11.6570 shares of Etsy’s common stock per $1,000 principal amount, equivalent to a conversion price of approximately $85.79 per share—representing a 42.5% premium over Etsy’s last reported stock price on June 11.
Etsy estimates net proceeds of approximately $639.3 million from the offering, or $688.5 million if the initial purchasers exercise their additional purchase option. The company plans to use about $150 million to repurchase shares of its common stock at $60.20 per share, with the remainder allocated for general corporate purposes, potentially including repayment of existing debt securities.
The notes will be convertible into cash, Etsy common stock, or a combination of both, at the company’s discretion. Etsy may redeem the notes after June 20, 2028, under certain stock price conditions.
The notes and related common stock have not been registered under the Securities Act and cannot be offered or sold in the United States without registration or an applicable exemption.
According to the press release statement, Etsy operates online marketplaces connecting buyers and sellers worldwide, including Etsy.com and fashion resale platform Depop. The company maintains impressive gross profit margins of 72.3% and trades at a P/E multiple of 36x. InvestingPro analysis suggests the stock is currently undervalued, with 12 additional key insights available to subscribers through their comprehensive Pro Research Report, part of their coverage of 1,400+ top US stocks.
In other recent news, Etsy announced a $650 million convertible notes offering due in 2030, aimed at qualified institutional buyers. The company plans to use up to $175 million of the proceeds to repurchase its common stock, with the remainder directed toward general corporate purposes, which may include repaying existing debt. This move comes as Etsy navigates market challenges, with the stock repurchase potentially offsetting dilution effects from the notes offering. In analyst updates, Bernstein SocGen maintained a Market Perform rating for Etsy, noting improved sentiment and a positive outlook for growth based on alternative data. Meanwhile, Cantor Fitzgerald raised Etsy’s stock price target to $52, citing short-term positive factors like product adjustments, while remaining cautious about long-term growth prospects. JPMorgan also increased its price target to $50, highlighting Etsy’s strong marketplace position and potential benefits from product investments and marketing efforts. Analysts noted Etsy’s solid financial performance, including a 27.8% adjusted EBITDA margin, though they acknowledged potential challenges from macroeconomic factors affecting discretionary spending.
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