Merchant Innovation

Etsy Heading Toward IPO

A decade after its birth in a Brooklyn apartment, online crafting marketplace Etsy is heading for an IPO on the NASDAQ. The company values itself at around $1.7 billion, according to a regulatory filing.  It is currently planning to trade under the ticker symbol “ETSY.”

Etsy is not as of yet a profitable venture, but it is one that is generating revenue – in 2014 it brought in $200 million by charging merchants to list their goods and taking a small cut from each sale.

The move is bold considering that other e-commerce firms that have recently gone the IPO path are experiencing some difficulties.  Zulily is trading at 40 percent of its 2013 IPO share price, and Wayfair has also seen its stock prices fall.  Even international e-commerce giant Alibaba has seen its stock price decline by almost a quarter in the months following its recording setting IPO.

Etsy is the brainchild of woodworker Rob Kalin, Chris Maguire, Haim Schoppik and Jared Tarbell, who united to create a website for craft makers and hobbyists – a site that today has 20 million shoppers and about a million sellers.

Etsy lost $15.2 million in 2014, a bit of an uptick from the $796,000  it was down in 2013, but its total revenue climbed 56 percent to $195.6 million. The company will have to attract many new storefronts if it is pursuing profitability; the site’s average seller generated just $1,400 in revenue in 2014. Gross merchandise sales on Etsy climbed by 43 percent to $1.9 billion in 2014, but average buyers are still only spending about $100 – the plateau that figure has been at for three years.

At the end of January 2015, Etsy valued its shares at $8.50 apiece, a large uptick from the sum the filing disclosed: the $5.30-a-share price at which it sold stock to private investment firm Tiger Global last April. As of January, Tiger held a 7.3% stake in Etsy, according to the filing.

Etsy’s investors include venture-capital firms Accel Partners, Union Square Ventures, Index Ventures and Tiger Global Management LLC, which collectively own 62 percent of the company. Accel, which invested in Etsy for the first time in 2008, is the largest shareholder, with a 27 percent stake.

Chief Executive Chad Dickerson said in a letter to potential shareholders that a goal of going public was so that “anyone will be able to own a piece of Etsy, including our sellers, our buyers, and anyone else who shares Etsy’s values and mission.”

The program will be run by Morgan Stanley, one of the offering’s underwriters, along with Goldman Sachs.

 

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