Etsy surges in trading debut
The arts and crafts retailer ends its first day at $30 per share.
The place
NEW YORK — where you can buy handmade dresses and crocheted dog costumes has a new hot seller: its own stock.
Shares of arts and crafts retailer Etsy surged in opening trading on the Nasdaq Thursday. After pricing at $16 late Wednesday the stock opened at nearly double that level, and hit a high of $35.73 in morning trading. The stock finished at $30 per share, up 87.5 percent for the day and valuing the company at $3.33 billion.
The healthy stock surge shows that Wall Street has a big appetite for a wellknown retail brand, even one that doesn’t yet make a profit. Thursday was one of the biggest days for initial public offerings so far this year, with party-store operator Party City and electronic trading firm Virtu Financial also making big debuts.
“It’s been a very slow IPO market so far this year and investors have been on the sideline waiting for a new name, especially a new name that’s familiar,” said Sam Hamadeh, CEO of research firm Privco.
Founded in 2005, Brooklyn-based Etsy sells anything from a $110,000 antique desk from the 1800s to a $20 handmade antler pendant and everything in between. In 10 years it’s grown from a scrappy startup offering craftspeople a way to sell necklaces and needlepoint online to a marketplace of 54 million members that generated $1.93 billion in sales in 2014.
While it doesn’t make a profit — it reported a loss of $15.2 million in 2014 — it has a very loyal customer base and room for revenue growth. The company says 78 percent of people who bought items on the site in 2014 were return customers.
And although it has a reputation for being a grassroots site, its revenue model is becoming more like Alibaba, the Chinese e-commerce powerhouse. In addition to taking a small percentage of each transaction made on Etsy, it is increasingly offering services like marketing and payment processing to its sellers. About 42 percent of its revenue in 2014 came from services.
“We think that it’s a very interesting company and investors are going to like the growth they see,” said Kathleen Smith, IPO exchange-traded fund manager at IPO research firm Renaissance Capital.