Craft site Etsy celebrates hugely successful IPO
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Version 0 of 1. Shares in Etsy, the online marketplace for home crafts, handmade goods and hipster clothing, more than doubled in value in the first hour of trading on its debut on Nasdaq. The initial public offering (IPO) priced the stock at $16, towards the top end of expectations, but by noon in New York Etsy was trading at $34.60 – a rise of 116.3 per cent. The IPO raised around $267m (£179m) in new capital for the company, which it will use to expand its global presence. That sum is significantly more than the $100m Etsy said it was seeking in its IPO filing, indicating strong demand from investors. That momentum was carried on as the shares soared. Demand for the stock may have been influenced by the slightly unusual nature of the IPO. In an effort to keep some of its early backers onside, Etsy reserved 15 per cent of its float for users willing to invest a minimum of $2,500. The balance was for institutional investors, although by the normal standards of Nasdaq IPOs, the institutional float was restricted to a small number of investors. In the past decade Etsy has graduated from a bedroom start-up in Brooklyn to ringing the bell at the opening of trade on Wall Street. Its chief executive, Chad Dickerson, has tried to downplay concerns that going public will change the culture of the company. But there is no doubt that Wall Street investors and the home crafts market have the potential to make uncomfortable bedfellows. Etsy’s growth has been significant – if hardly explosive by current technology standards. It is closer to making a real profit than most, though. The company had just under 20 million customers last year, with around 1.8 million active sellers – generating a 56 per cent jump in revenue to $195.6m. Interest, tax and other non-cash charges prevented the company from making a profit, although it did record positive cash flow. Non-sale fees, such as labelling and payment processing for sellers, are Etsy’s fastest-growing revenue stream. |