About the Author IPOdesktop

During the IPO season Francis Gaskins, editor of IPOdesktop.com & director of research for Equities.com, regularly appears on CNBC TV, Bloomberg, thestreet.com & other financial cable channels. On the day of the Visa IPO he appeared on four cable TV financial shows including Bloomberg & CNBC. Over the past five years he has been quoted over 500 times by such financial media as the Wall Street Journal, Bloomberg, Reuters, Associated Press, USA Today among others. Those quotes are available at IPOdesktop.com. His varied personal interests include violin playing. For example, he is concertmaster of the Palisades Symphony. He also holds an MBA from Harvard Business School (finance) and an AB from Princeton University (economics).

IPO Preview: Etsy Inc (ETSY)

Based in Brooklyn, NY, Etsy Inc (NASDAQ:ETSY) scheduled a $250 million IPO on Nasdaq with a market capitalization of $1.67 billion at a price range midpoint of $15 for Thursday, April 16, 2015.

The full IPO calendar is available at IPO Premium.

SEC Documents

Manager, Joint-managers: Goldman Sachs
Co-managers: Morgan Stanley/ Allen & Company

End of lockup (180 days): Tuesday, October 13, 2015
End of 25-day quiet period: Monday, May 11, 2015

ETSY operates a marketplace where people around the world connect, both online and offline, to make, sell and buy unique goods.

Handmade goods are the foundation of ETSY’s marketplace


Accumulated deficit ($mm) . . -$33
Per share dilution . . -$12.34
Valuation Ratios Mrkt Cap ($mm) Price /Sls Price /Erngs Price /BkVlue Price /TanBV % offered in IPO
Etsy $1,665 8.5 -111.0 5.0 5.7 15%
Valuation Ratios Mrkt Cap ($mm) Price /Sls Price /Erngs Price /BkVlue Price /TanBV
Etsy $1,665 8.5 -111.0 5.0 5.7
Amazon (NASDAQ:AMZN) $175,000 2.0 -726.1 16.3 26.0
eBay (NASDAQ:EBAY) $68,720 3.8 1493.9 3.5 6.7
*ebay paid $3.4bb in income taxes for 2014


ETSY operates a marketplace where people around the world connect, both online and offline, to make, sell and buy unique goods.

Rev +56%, gross profit +58%

Gross profit 62% of rev

Net loss -8%

Gross merchandise sales +43%

Active buyers +41%

8.5 times sales,, 5 times book, P/E of -111

Compare to AMZN & EBAY, see below.

To put the conclusions and observations in context, the following is reorganized, edited and summarized from the full S-1 referenced above.

ETSY operates a marketplace where people around the world connect, both online and offline, to make, sell and buy unique goods.

Handmade goods are the foundation of ETSY’s marketplace. Whether crafted by an Etsy seller herself, with the assistance of her team or with an outside manufacturer in small batches, handmade goods spring from the imagination and creativity of an Etsy seller and embody authorship, responsibility and transparency.

ETSY believes it is creating a new economy, which ETSY calls the Etsy Economy, where creative entrepreneurs find meaningful work and both global and local markets for their goods, and where thoughtful consumers discover and buy unique goods and build relationships with the people who sell them.

Etsy was founded in June 2005 in Brooklyn, New York as a marketplace for handmade goods and craft supplies.

From those beginnings, ETSY has built an innovative, technology-based platform that, as of December 31, 2014, connected 54.0 million members, including 1.4 million active sellers and 19.8 million active buyers, in nearly every country in the world.

In 2014, Etsy sellers generated GMS (gross merchandise sales) of $1.93 billion, of which 36.1% came from purchases made on mobile devices and 30.9% came from an Etsy seller or an Etsy buyer outside of the United States.

According to Etsy’s blog, the company receives 50 percent of its visits from mobile devices, which is driving more of its volume.

ETSY’s community is the heart and soul of Etsy. ETSY’s community is made up of creative entrepreneurs who sell on ETSY’s platform, thoughtful consumers looking to buy unique goods in ETSY’s marketplace, responsible manufacturers that help Etsy sellers grow their businesses and Etsy employees who maintain ETSY’s platform and nurture its ecosystem.

Business model
ETSY’s business model is based on shared success: ETSY makes money when Etsy sellers make money.

ETSY’s revenue is diversified, generated from a mix of marketplace activities and the services ETSY provides Etsy sellers to help them create and grow their businesses.

Marketplace revenue includes the fee an Etsy seller pays for each completed transaction and the listing fee an Etsy seller pays for each item she lists.

Seller Services revenue includes fees an Etsy seller pays for services such as prominent placement in search results via Promoted Listings, payment processing via Direct Checkout and purchases of shipping labels through ETSY’s platform via Shipping Labels. Other revenue includes the fees ETSY receives from a third-party payment processor.

Intellectual property


ETSY competes with retailers for the Etsy seller.

An Etsy seller can list her goods for sale with online retailers or sell her goods through local consignment and vintage stores and other venues and marketplaces.

She may also sell wholesale directly to traditional retailers, including large national retailers, who discover her goods in ETSY’s marketplace or otherwise.

ETSY also competes with companies that sell software and services to small businesses, enabling an Etsy seller to sell from her own website or otherwise run her business independently of ETSY’s platform.

ETSY is able to compete for Etsy sellers based on its brand awareness, the breadth of ETSY’s online presence, the number and engagement of Etsy buyers, ETSY’s Seller Services, ETSY’s fees, the strength of ETSY’s community and ETSY’s values.

ETSY also competes with retailers for the attention of the Etsy buyer.

An Etsy buyer has the choice of shopping with any online or offline retailer, whether large marketplaces or national retail chains or local consignment and vintage stores or other venues or marketplaces.

ETSY is able to compete for Etsy buyers based on the unique goods that Etsy sellers list in ETSY’s marketplace, awareness of ETSY’s brand, the person-to-person commerce experience, ETSY’s reputation for authenticity, ETSY’s mobile apps, ease of payment and the availability and reliability of ETSY’s platform.

5% shareholders pre-IPO
James W. Breyer 30%

Fred Wilson 15.2%

Entities affiliated with Accel Partners 27.0%

Entities affiliated with Index Ventures 12.8%

Entities affiliated with Tiger Global Management 7.3%

Entities affiliated with Union Square Ventures 15.2%

No dividends are planned.

Use of proceeds
ETSY expects to receive $182 million from its IPO and use it for the following:

working capital and general corporate purposes, including continued investments in the growth of ETSY’s business.

Consistent with ETSY’s values and its mission, ETSY also intends to use $300,000 of the proceeds of this offering to partially fund Etsy.org, a Delaware non-profit organization that ETSY formed in January 2015.

Etsy.org will be dedicated to educating women and other under-represented entrepreneurial populations and empowering them to build businesses that regenerate communities and the planet.

Disclaimer: This ETSY IPO report is based on a reading and analysis of ETSY’s S-1 filing, which can be found here, and a separate, independent analysis by IPOdesktop.com. There are no unattributed direct quotes in this article.

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