Why Etsy Inc. Stock Soared Today

By Daniel Sparks Markets Fool.com

What happened

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Shares of Etsy (NASDAQ: ETSY) soared as much as 23.3% on Tuesday after the company commented on two activist investor groups' large stakes in the company. Shares are up about 23% at the time of this writing.

So what

TPG Group Holdings and Dragoneer Investment Group revealed Monday afternoon that they built 4.3% and 3.7% stakes in the online marketplace company, respectively. In two 13D filings with the SEC, the groups said they are urging Etsy to "engage in discussions regarding strategic alternatives."

Image source: Etsy.

Etsy said in a press release that it "values constructive engagement with its shareholders and is focused on maximizing value for all shareholders." Further, Etsy CEO Josh Silverman noted that the company is reviewing its strategic and operational plans.

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The activist groups' actions come shortly after the company swung to a loss and replaced its CEO.

Now what

Looking ahead, Etsy said it will provide "additional details" when its review of its strategic and operational plans is complete.

When Etsy shares more details on its review, investors should look to see if any changes to the company's strategic plans will impact their own outlook for the stock.

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Daniel Sparks has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Etsy. The Motley Fool has a disclosure policy.