Etsy, Inc. has replaced Chad Dickerson with Josh Silverman, a director, as its new CEO. The company said it was cutting 8% of its overall workforce in an attempt to cope with a slowdown in growth of sales.
Shares tumbled by up to 21% in the news.
Silverman takes the company reins effective on Wednesday. Dickerson, who led the marketplace for artisan crafts for 6 years, will step down as well as board chairman and will be replaced by Fred Wilson the co-founder of Union Square Ventures and a longtime investor at Etsy.
Etsy based in Brooklyn, New York, posted revenue for the first quarter on Tuesday that reached $96.8 million, which missed average estimates of analysts. Though it gained 18% in sales, it was the fourth consecutive quarter for the company of slowing growth.
Shares were down in extended afterhours trading following the release of the earnings report and the CEO change.
Black and White Capital a hedge fund disclosed it has a stake of 2% in Etsy on Tuesday and announced it had urged the business to accelerate its revenue growth and lower operating costs it said were bloated.
Etsy, which saw a slowdown for new sellers as well as buyers added to the platform and the number of transactions that flow through the marketplace, said it will eliminate at least 80 jobs.
Silverman on Tuesday did not answer a question about why he thought Etsy should remain independent and not sell. There is a huge opportunity for the company it has only started to tap into and has a bright future had added.
As Etsy CEO, Silverman said he will focus on driving additional traffic to its marketplace, get visitors to spend and increase Etsy loyalty.
Etsy has traditionally spent little for marketing so opportunities exist to pay to gain users he said.
The company, which said it is expecting gross merchandise sales, the complete value of items that are sold through its platform, to decline gradually, has depended upon selling more services to sellers as a way to generate revenue.
It category Seller Services, which includes products such as shipping labels, listings that are promoted on its marketplace and its payment processor, now represent as much as 55% of its total revenue.
Even though sales were bolstered at Etsy by these services, growth in that line in the business has slowed. Over the long term, prospects for the company are dependent upon convincing buyers to spend money on its different sites.