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Etsy stock has lost 76% of its value in 9 months
- theseatoms 11y agoThis doesn't bode well for other publicly traded B corporations, unfortunately. https://en.wikipedia.org/wiki/Benefit_corporation https://en.wikipedia.org/wiki/Benefit_corporation
- Quinner 11y agoWhy does this have anything to do with it's status as a B-corp, rather than other market pressures on Etsy specifically, including Amazon's efforts in the space?
- thecolorblue 11y agoEtsy is a test, in some ways, to see if the b corp model can fit in a large, publicly traded company. The hope was that the b corp model would break out of its niche, and be applicable more globally.
- deleted 11y ago[deleted]
- jonknee 11y agoEtsy's problem is not that it is a B Corp, it's that it loses money and has slowing growth (which means it will likely lose a lot more money!). If they had great numbers it could be run as a sketchy holding company in the Cayman islands and still attract investors.
- vanattab 11y agoCan you expand on why this a bad sign for B Corps more so then C Corps? Honest question. Before reading the link I did not know the difference between B and C.
- Dwolb 11y agoA simple explanation is B-corps can have a charter which is at odds with the interests of shareholders while C-corps are fully aligned with 'maximizing shareholder value' e.g. "I've created a B-corp, named Betsy, which has the distinct mission of making it viable for more people to choose craftsmanship as a career. I cannot be sued for adhering to my charter in good faith so one thing I can offer all sellers is an insurance plan even if this move has a net negative impact on profit." This can be contrasted to a C-corp in which its officers could technically be sued by acting in ways which are value or profit-destroying for the firm.
- forgotpasswd3x 11y agoYour simple explanation still fails to prove that's why Etsy is losing so much value.
- SixSigma 11y agoFacebook seems to be doing ok
- theseatoms 11y agoI don't know the details of the Etsy's financial situation, so my initial comment seems a bit flippant, having re-read it. But regardless, Etsy was a high profile B corp IPO, so I expect people to draw conclusions from its success or failure regarding the viability of B corps in public equity markets. (Warby Parker and Patagonia are two other B corps.) After all, public companies are legally obligated to maximize shareholder value.
- w1ntermute 11y agoAngie's List: from $28 in Jul 2013 to $9[0] Box: from $24 in Jan 2015 to $10[1] GoPro: from $87 in Oct 2014 to $11[2] Groupon: from $26 in Nov 2011 to $2.60[3] GrubHub: from $46 in Apr 2015 to $21[4] Twitter: from $70 in Jan 2014 to $18[5] Yelp: from $97 in Mar 2014 to $21[6] Zillow: from $121 in Feb 2015 to $22[7] Zynga: from $15 in Mar 2012 to $2[8] 0: http://www.google.com/finance?q=ANGI http://www.google.com/finance?q=ANGI 1: http://www.google.com/finance?q=BOX http://www.google.com/finance?q=BOX 2: http://www.google.com/finance?q=GPRO http://www.google.com/finance?q=GPRO 3: http://www.google.com/finance?q=GRPN http://www.google.com/finance?q=GRPN 4: http://www.google.com/finance?q=GRUB http://www.google.com/finance?q=GRUB 5: http://www.google.com/finance?q=TWTR http://www.google.com/finance?q=TWTR 6: http://www.google.com/finance?q=YELP http://www.google.com/finance?q=YELP 7: http://www.google.com/finance?q=NASDAQ:ZG http://www.google.com/finance?q=NASDAQ:ZG 8: http://www.google.com/finance?q=ZNGA http://www.google.com/finance?q=ZNGA
- toomuchtodo 11y agoIf there was only an ETF for shorting the startup tech sector...
- blobbers 11y agoYou don't need an ETF to short the startup tech sector.
- deleted 11y ago[deleted]
- toomuchtodo 11y agoI also don't need SPY to invest in the S&P500, but it makes it easier!
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- sulam 11y agoTo be clear, it's lost XX% of it's market cap. The market cap is a knowingly-flawed assessment of earnings potential for a company. Its actual value is probably unchanged.
- rail2rail 11y agoThe value of Etsy changed when Amazon entered its space. It is objectively worth less now that the 800 lb gorilla has decided to eat Etsy's lunch.
- adventured 11y agoAmazon fails to eat other companies lunch more often than it succeeds in fact. See: search, auctions, classified ads, smart phones, etc.
- paulcole 11y agoI don't think this has much to do with it. Amazon's attempt was really half-assed (classic Amazon, to be honest). The only mention of Handmade on the Amazon homepage is in the "Search by Category" dropdown. The real issue in my opinion is that Etsy discovered that they couldn't keep growing without opening their doors to cheap non-handmade shit. Which they've done. And their search/discoverability is absolutely awful. My partner lists her truly handmade products on Etsy but only as an afterthought. As the amount of garbage on Etsy has increased, her views/sales have dropped. She has put all of her effort into getting sales through her own website, where at least she's in control.
- tootie 11y agoI think the ones who really ate their lunch were companies like Shopify.
- keepyourdayjob 11y agoSpeaking with some knowledge of the company, it boggles the mind a little that they failed to snap up Shopify (or more likely one of that company's scrappier competitors) when Etsy got like $27M in 2008. Every single time Etsy didn't help a seller set up their own e-commerce site, someone else did, and this happened hundreds of thousands of times. And is still happening. But Etsy struggled with leadership and technical problems in those days that were really serious, and not easily solved.
- sulam 11y agoTo be clear, it's lost XX% of it's market cap. The market cap is a knowingly-flawed assessment of earnings potential for a company. Its actual value is probably unchanged.
- chris_wot 11y agoThe lockup agreement expired. Looks like employees and executives are selling up big time. http://www.marketwatch.com/story/etsy-shares-fall-after-expiration-of-lockup-agreement-2016-01-11 http://www.marketwatch.com/story/etsy-shares-fall-after-expi...
- sirtastic 11y ago...and rightfully so since Amazon entered the space back in October. That's a killer blow to a business that has struggled since it went public.
- deleted 11y ago[deleted]
- joeblau 11y agoThat's crazy. The employees owners just gutted the value of their own company.
- _rpd 11y agoAlternatively, they are informing the market of their perceived value of the company.
- x0x0 11y agoOr rationally reacting to having their net worth concentrated nearly entirely in a single security. Contrary to essentially all financial advice.
- Rotten194 11y ago...and? Would the company not do the equivalent to them?
- chris_wot 11y agoIt could well be that the employees did that after management made decisions that they feel gutted the value of the company anyway.
- adventured 11y agoAnd they're actually a better value today thanks to the proper correction, than they were at the point of IPO, despite what the analysts and pumpers (or shorts) would tell you. Now they're trading for 2.x times sales for fiscal 2015. They have 1/3 of their market cap in cash. And they're accumulating cash from operations rather than burning it. The value proposition on the stock is dramatically higher than it was when the hype was on the moon.
- maxxxxx 11y agoIsn't that the strategy these days? Extract as much value from a company and only then go public?
- w1ntermute 11y agoYep, IPOs are the new down rounds. The founders/early investors sell shares on the private secondary market pre-IPO, leaving the public and the employees holding the bag after the IPO.
- shostack 11y agoAre there other instances of this happening in the secondary markets?
- rdl 11y agoSquare, Box.
- edanm 11y agoWhy would that leave "the public" holding the bag? The IPO itself is a down round, which means the public is buying at a lower and, by that view, more "correct" price. But the drop in value has already happened - the public isn't losing out unless there's a further price drop, which is not what is being talked about and won't necessarily happen. The ones losing out are, in some cases, the employees, and in some cases, the last stage investors. But the investors are usually investing in ways that more closely mimic debt than equity, and usually have ratchets to protect themselves.
- jliptzin 11y agoWhen the primary purpose of an IPO is to cash out and not raise money for growth, run for the hills.
- deleted 11y ago[deleted]
- adevine 11y agoIt's not really correct to say "Wall St loses its shit." I think it's more correct to say that the extremely high valuations to start with are predicated on the idea that these companies can expand well beyond their initial niche. They're all hoping to be like Facebook, who went from college kids to the whole world. When it starts to become apparent that this won't happen, valuations come down to reflect a niche product. You may say that Twitter has been beaten with a bat by Wall St, but they are still worth 12 billion dollars. Someone hit me with that bat.
- jheriko 11y ago"over-hyped gimmicky thing trendy with hipsters out-of-touch with reality starts to fail over short period of time" not surprised one bit. i echo the sentiment of other commenters who give other examples. this is only surprising if you are also out of touch with reality
- stcredzero 11y agothis is only surprising if you are also out of touch with reality I wonder if we can quantify a higher incidence of surprise in the Bay Area startup scene?
- rhizome 11y agoWho said anybody was surprised?
- jleader 11y agoPresumably anyone who invested in etsy 9 months ago was surprised.
- flashman 11y ago"trendy with hipsters out-of-touch with reality" If only you knew some actual Etsy users. Many are suburban mothers that like to craft.
- jheriko 11y agothats not entirely what i was getting at... but i take the criticism. i don't know very much. mainly because of all the hype putting me off...
- alexkavon 11y agoBubbles, bubbles, everywhere. Will they pop? Will anyone care?
- jonknee 11y agoI wouldn't be surprised if Etsy is acquired now that the share price is beaten down. Seems like a good fit for eBay (it would provide much needed relevance) or Amazon. It's a good brand name, but not much else.
- BinaryIdiot 11y agoMy thoughts exactly! Etsy seems like a perfect business for someone like eBay to snap up. Though I could see Amazon having an interest, too.
- winterchil 11y agoI understand the product-fit, but what incremental value does Etsy bring to either of those companies?
- BinaryIdiot 11y agoNeither of them have marketplaces for custom made goods (for the most part at least compared to etsy) and both are in competition with each other to expand their marketplaces to as far as they can go. Seems like it would be a good fit to me. I'm not sure how it ultimately gets integrated it (maybe it doesn't?).
- narrowrail 11y agoWhat about Amazon? They launched a competing marketplace in October: http://www.nytimes.com/2015/10/08/business/amazon-challenges-etsy-with-strictly-handmade-marketplace.html http://www.nytimes.com/2015/10/08/business/amazon-challenges... But, don't let that stop you...
- BinaryIdiot 11y agoI didn't even know about that and neither did my wife who is obsessed with etsy. I'm not sure Amazon by itself is going to draw in the huge amount of users etsy as brought in; I could easily see etsy augmenting their existing offering. Just my opinion though. Who knows for real.
- analyst74 11y agoAs they always say, this time is different. My opinion is that the tech sector has greatly expanded since 2000, not just in amount of investment available, but also types of business tech companies are actually in. So maybe there is a web/ad bubble and it might pop, but how much that affects individual company is more nuanced. Unsophisticated investors might still lump Google/Twitter/Tesla/AMD into the same "tech sector", but they will find the signal they receive is very mixed and difficult to analyze.
- vonklaus 11y agoi have been thinking about this a lot. Peter Theil talks a lot about paypal when they were burning cash, but they had finally started to get the business fundamentals together. He calculated, i am approximating but it was close to, 80% of the companies worth came after 20 years. My thinking is that public markets are shitty, so almost all of the value capture takes place way before a company is worth it, it stays private a long time, goes public, then slowly grows for 5 years fails to adapt and dies. Look at google. They know search is about to change majorly, they have already spun into a meta-architecture. Doing things quickly, capturing that value, and then adapting is the only way to survive. If you do adapt enough to survive, you are a conpletely different conpany than when you started. If you dont, all the value has been captured by provate markets, the company gets sluggish, and isnt that profitable for "retail investors". Amazon sort of the one exception. They saw the world how it is now over 10+ years ago, and are still competing and incrsting in growth because thats how you win. You have to own all the infrastructure, so you dont have to work as hard. Either way, uber is more like ebay than like lyft. Sectors have subsectors because everything is close to winner take all. You analyze by looking at what the smart people are doung. Stripe = infrastructure Aws = end to end automated everything Google is organizing as a think tank/incubator Ycombinator is funding smart crazy people who move fast.
- fweespeech 11y ago> My thinking is that public markets are shitty, so almost all of the value capture takes place way before a company is worth it, In a public market, capitalism [generally] prices things appropriately so its hard to make a killing on it. But, you can still make money. That is the basic function of a fair market and its important it continues to exist.
- profinger 11y agoI'm not surprised at all. Etsy used to be user based and hand made. Now it's just another market place. They still act like they try to enforce "non-mass-produced" but there are countless examples of the opposite being true. Places where people have directly reported instances of this and the problem is still present. I think the problem is that they stopped caring about their user base and, therefore, became less ubiquitous and people saw that and were like "oh.. time to value them lower.."
- jonnathanson 11y agoAn alternative hypothesis: maybe they reached the limits of the scalable, addressable, growth market for small-batch, handmade goods?
- hodwik 11y agoThey did, and then they failed to respond properly because their corporate leaders are a bunch of hippies.
- jethro_tell 11y agoOr they did, but there was pressure to keep growing because investors need to cash out of their over valuation. There's nothing wrong with having a company that serves a market and pays all its people a good wage. Unless of course you over valued a company and invested to much money to get paid out in your 5 year time frame then that's a really shitty thing.
- vonklaus 11y agoAn alernative hypothesis is that etsy was a predominently female community that (kind of conjecture) used to have a comminty driven social aspect. As it became more of a market place, and less of about discovery and community, most of those people moved to the "better version" of etsy. Now, pinterest is the best of both worlds, a place full of like minded people driven by discovery of cool things (what etsy was) and the marketplace is like central. I suppose gender doesn't matter, but it is worth mentioning these sites have a greater population of women and most of the products I have seen are jewelry, clothing or crafts that are made by women and likely bought by their peers. I suspect, that as it became less trendy and creative, and more of a store, most of the top people left and went to pinterest. When a community has a their top talent leave, and their competitors are more in line with their customers expectations, then thay community is through. Pinterest isnt something I use, but I have seen some cool designs and for discovery of certain things, it seems great. Tl; dr, as an outsider, i think thar pinterest out etsy'd etsy
- dtx 11y agospeciality ecommerce has always been a moody market and a company like Etsy getting traded at this value is still just sentimental value. The company has had negative margins for a while, along with negative returns on all it's assets. Operating cash flow is a mere 2% of the current market cap. This defines shambles unless it can really turn it's fortune around in '16-17.
- marme 11y agoetsy is clear case of poor management, just taking a brief look at their financial statements it is clear they are doing something clearly wrong. Their revenue is growing but their expenses are growing at the same rate so they remain unprofitable. from 2014 to 2015 revenue grew from 29 million to 45 million per quarter while general expenses grew from 22 million to 31 million. Amazon is another company that does this but at least they have the sense to keep the company slightly in the black to slowly gain small amount of cash reserves, etsy is just burning through their capital for no reason, they earn plenty of revenue to be able to turn a profit
- milesskorpen 11y agoAmazon is frequently in the red.
- dplgk 11y agoA couple years ago I met with the guy who runs tech there and he said they had 150 developers....! How many do they have now and what the heck are they working on?
- perseusprime11 11y agoThey are reinventing the wheel by building an ecommerce site.
- brobinson 11y agoAmazon reinvests a ton of money into expanding itself. Investors are aware of this.
- sly_foxx 11y agoThey can obviously make money by raising a transaction fee a little bit from 3.5% to maybe 5%-7%. eBay has done it to 10% + PayPal fees and they are making billions in net profits.
- benhebert 11y agoWhat is etsy spending their money on? What's their main expense? Talent?
- kelseydh 11y agoGood time to buy.
- ratonofx 11y agoas a two-sided marketplace, etsy got a wrong balance between vendors and buyers... Last time I did read they speaking about making a lot of money offering vendors' services... They abandoned the crowdsource, the crowd abandoned them..
- bigB 11y agoAll comes down to Monetization really.....If you dont find a good way to make a profit stock price will fall. Investors will only wait a certain amount of time before losing faith and interest.
- aszantu 11y agoso, where do I turn now if I want to sell my prints?
- perseusprime11 11y agoThe stock should trade at $2 if you look at their financials. Growth stalled a while back. Etsy will never be able to compete with Pinterest. This is a $100 million dollar company in the guise of $1b. Going the same way as gilt group.
- mw67 11y agoThere is no market. People want an iPhone 6, not a wooden necklace