So, Etsy Inc. (ETSY) is selling its Depop resale marketplace to eBay Inc. (EBAY) for $1.2 billion in cash. The idea, according to KeyBanc Capital Markets analyst Ashley Owens, is to let Etsy stop juggling multiple balls and focus on "driving growth within the core Etsy marketplace." The deal is expected to close in the second quarter.

Owens, who maintains a Sector Weight rating on Etsy stock, laid out the logic in a note. Selling Depop "allows ETSY to focus on driving growth within the core Etsy marketplace while also utilizing the proceeds for general purposes/share repurchases, which we view favorably," he wrote. In other words, it's a back-to-basics move, with some extra cash for buybacks or other corporate needs.

Here's the interesting bit of history: Etsy didn't buy Depop to sell it. The company acquired the resale platform back in July 2021 for roughly $1.625 billion. Since then, Owens notes, Depop became "one of the fastest growing resale marketplaces." By the end of last year, it boasted about 7 million active buyers, 3 million active sellers, and racked up $1 billion in gross merchandise sales for the full year.

So, Etsy is selling a growing asset. That's where the analyst's skepticism creeps in. Owens says the transaction does simplify Etsy's underlying business, which is good. But, he adds, "we remain cautious as ETSY's ability to revive core GMS growth remains unproven." The core marketplace is the main event, and its growth engine has been sputtering. Getting rid of a side project, even a pricey one, doesn't automatically fix that.

Investors seemed to like the news, at least initially. Shares of Etsy were up 9.93% to $48.42 at the time of the report. The market often cheers simplification. Now Etsy just has to prove that focusing harder on its original marketplace is the right recipe for growth.