Activist investors are coming for Etsy.

Elliott Management, the investment management firm that's known for its aggressive governance tactics, has built a roughly 13% position in Etsy's stock, CNBC reports-a mix of shares and options. That makes Elliott Etsy's largest investor after Vanguard, which has an 11% share, and the asset management giant BlackRock (5%).

And — effective today — Elliott has a seat on Etsy's board of directors. The company said this morning that Marc Steinberg, an Elliot partner, will join the 10-person board effective February 5.

"Etsy has a highly differentiated position in the e-commerce landscape and a uniquely attractive business model, supported by a distinctive and engaged community," Steinberg said in a press release. "We became a significant investor in Etsy and I am joining its board because I believe there is an opportunity for significant value creation. I've been looking forward to working with the Board and supporting Josh and the team as they execute on initiatives to improve the customer experience, accelerate top- and bottom-line growth, and drive long-term value."

Elliott, with some $59 billion in assets as of June 2023, works in a typical activist investor manner: by taking a big share in what it believes to be an under-evaluated firm and pressing the management to act according to its demands.

Elliot restructured firms like Enron, TWA and WorldCom during early years of its history, but for the past few decades, the focus of this firm had turned towards the rather money-rich tech sector.

Elliot bought $2 billion in Twitter shares and elected three directors to the company's board as part of an effort to oust then-CEO Jack Dorsey in 2020. Elliot has tried a "turnaround" at Pinterest. And it forced Salesforce, in which it has a stake of billions of dollars, to implement strict new policies for engineers and salespeople designed to trim headcount.

To be fair, Etsy hasn't had the strongest go of it lately - ending last year with mass layoffs.

The retailer is fighting on many fronts to keep low-cost Chinese retailers like Temu and Shein at bay, while also trying to keep some pretty poorly made stuff and scam artists off the marketplace. This past quarter, Etsy CEO Josh Silverman finally admitted on an earnings call that Temu and Shein, which have committed billions to advertising their services, were fueling an increase in the sellers' marketing expenditures on Etsy. Meanwhile, outlets report, AI-generated junk is flooding Etsy, worsening the search experience on the platform.

Still a marketplace for artisanal and handmade goods by small businesses, Etsy has struggled to get back on its feet after sales and revenue gains during the pandemic proved ephemeral. In an effort to grow new lines of business, Etsy made several acquisitions in recent years by snatching up resale platform Depop; Elo7, a Brazil-based marketplace; and Reverb, a marketplace for new and used instruments. However, the M&A strategy has not borne fruit. The latest example is that Etsy sells off Elo7 two years after buying it for $217 million.

On its last earnings call, Etsy told investors to expect gross merchandise sales to slump by between 1% and 2%, revenue to inch up by just 2% to 3%. Perhaps it shouldn't be surprising that the promise of deep cost-cutting from Elliot drove Etsy's stock up 10% this morning.