Etsy (ETSY): A $1.11 Earnings Miss That Never Happened - And A $2B Buyback

Etsy, Inc. (ETSY) Q2 2026 — Q2 GAAP diluted EPS $(0.36) vs a ~$0.75 bar - while revenue BEAT at $668.3M vs $646.1M est. Continuing-operations diluted EPS was $0.98, a 31% beat. The entire gap is Depop, sold to eBay on July 30 and booked as a discontinued operation: $(161.0)M, or $(1.34) a diluted share. GMS $2.6B +7.5%, take rate 25.9%, adjusted EBITDA $195.4M at a 29.2% margin. FY26 margin guidance RAISED to 29-30%. New $2B buyback. Stock -4.19% to $82.26 on the print. Etsy 'missed' by $1.11 and beat on revenue in the same release. Both facts are true, and they are not in tension: the $(0.36) headline is total diluted EPS including discontinued operations, while the ~$0.75 bar was a continuing-operations estimate. Continuing operations earned $0.98. Depop - sold to eBay on July 30 - cost $160,989 thousand, which over 119,961 thousand diluted shares is exactly $(1.34). $0.98 minus $1.34 is $(0.36). And the Depop loss was driven by $170.2M of Q2 marketing against $21.1M a year ago, spending Etsy's own letter says was 'recovered through purchase price adjustments on the closing date' - eBay reimbursed it via $200M of adjustments at the $1.4B close. Next quarter GAAP lies the other way: an estimated $840M gain on an asset Etsy bought for $1.625B and sold for $1.4B. THE CALL: BUY (3/5, THE MISS IS A DEPOP ARTIFACT. THE GROWTH IS PRICE-LED) — base-case value ~$105.0 vs ~$82.26 today. KEY METRICS: - CALL: BUY 3/5, fair value ~$105 vs the $82.26 tape (+28%). Street: 45 analysts, $75 avg target - BELOW the price. We DIFFER. - Continuing-ops diluted EPS $0.98 vs a ~$0.75 bar. The $(0.36) headline is Depop: $(161.0)M of discontinued ops = $(1.34)/share. - Rev $668.3M vs $646.1M est. GMS $2.6B +7.5%. Take rate 25.9%. Adj EBITDA $195.4M, 29.2%. FY margin guide RAISED to 29-30%. What to watch: UP: trailing-twelve-month active buyers turning positive, purchase frequency turning positive, or the new $2B authorization actually being spent near $82. BEAR: take rate stalling below 26%, a Q4 guide with GMS growth back under 4%, or seller churn showing up in active listings. Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.