Etsy (ETSY - Get Report) is finally starting to get crafty on Wall Street.

Shares of Etsy are up 12.6% Wednesday to over $14 following the company's solid second-quarter earnings after the markets closed Tuesday.

Etsy posted revenue of $85.35 million and Ebitda of $14 million, easily breezing through Wall Street's consensus of $81 million and $7.2 million. The Brooklyn-based e-commerce company posted a loss of 6 cents per share while analysts were anticipating for a loss of 1 cent per share.

The quarter's revenue marks a 39% increase from the corresponding period a year ago lifted by growth in gross merchandise sales. GMS went up about 23% year over year, with mobile GMS enjoying an impressive 34% increase and desktop GMS posting a solid 14% jump.

"E-commerce is really taking off. E-commerce growth is accelerating," said Wedbush Securities analyst Gil Luria via phone, pointing to solid second-quarter reports from (AMZN - Get Report) , eBay (EBAY - Get Report) , Shopify (SHOP - Get Report) as well as Etsy.

A big driver of this solid performance has been the increasing penetration of mobile commerce, he said, adding that Etsy in particular has reaped such benefits with its well-designed mobile tool as consumers continue to shop more on their phones.

With a strong second quarter, Etsy may be shifting the gear from a disappointing stock since its initial public offering last year to a gem in the e-commerce universe. The stock is down about 52% since its market debut in April 2015.

Etsy has been successful in carving out a niche of connecting sellers and buyers of handmade and vintage items, Luria explained.

"There's no reason why Etsy can't be successful and grow at the overall rates of e-commerce," he said. "It's all about expectations. After the IPO, they set unreasonable expectations and fell short."

Meanwhile, there may be more upside for Etsy.

"Without a doubt, I see this as a further validation of the business model and their opportunity to continue to expand their seller services," said Maxim Group analyst Tom Forte in an interview, adding that future looks bright for the e-commerce house. He said the market hadn't given Etsy the credit it deserves.

Etsy has a business model with elements of eBay's marketplace, Alphabet's (GOOG - Get Report) advertising services for sellers and PayPal's (PYPL - Get Report) payment capabilities, in addition to shipping offerings, Forte said.

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"Wall Street has focused on the eBay element, missing all the other elements," Forte said, adding that the stock and its investors are start to be rewarded as the market starts to recognize the hidden gems of the Etsy umbrella.

The beauty of the quarter was Etsy still pulled off a strong revenue growth and strong margins despite not seeing its mobile efforts truly come to fruition, he said.

"What you're seeing this quarter is that companies are proving that businesses are still viable and that Amazon is not taking 100% of the market share and investor expectations. These companies are showing resiliency and improving results," Forte said.