Party City, Etsy IPOs make noise on NYSE
Both companies see shares surge in stock-market debut
Bringing green wigs and noisemakers to Wall Street, Party City Holdco Inc. gained in its trading debut, after the largest U.S. party supplies retailer raised about $372 million (U.S.) in an initial public offering Thursday.
Meanwhile, the Etsy online marketplace also launched its own stock.
Party City’s stock gained 21per cent to $20.50 after Party City sold 21.9 million shares for $17 apiece. The company plans to use the proceeds for a $30.7-million termination fee to its backers and to repay debt.
Party City has been trying to go public since 2011. The Elmsford, N.Y.based company initially filed a prospectus four years ago, and delayed the deal amid a stock-market slump. In 2012, Thomas H. Lee agreed to buy a majority stake from Party City, which then refiled for an IPO in January 2014.
Now, with U.S. benchmarks near record highs and projections for a pickup in consumer spending, Party City is finally making its debut.
The company offers party supplies from costumes to pinatas. Last year, it posted $2.27 billion in revenue, up 11 per cent from 2013, regulatory filings show. Party City will have $1.9 billion in total debt following the IPO.
In other IPO news, the place 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 surged 88 per cent by the end of the day.
The healthy stock jump shows that Wall Street has a big appetite for a well-known 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.
“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 per cent of people who bought items on the site in 2014 were return customers.