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Etsy sets IPO price range at $14 to $16

The company will be able to raise as much as $266.7 million, and could be valued at $1.2 billion

Financial trends and news by Steven Loeb
April 1, 2015
Short URL: http://vator.tv/n/3cea

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2015 has so far not been kind to the IPO market, but there is some hope on the horizon, in the form of a few companies that have already declared their intentions to go public.

One of those is Etsy, the peer-to-peer marketplace dedicated to selling handmade and vintage items, which filed its S-1 form with the Securities and Exchange Commission earlier this month. At the time the company said it was looking to raise $100 million.

Now Etsy has updated its filing, with more specifics about the potential price, and an updated amount it is looking to raise. The company is looking to price its shares at between $14 and $16. With 16.7 million shares to be sold, that would allow the company to raise as much as $266.7 million in its public offering.

It should be noted that only 13,333,333 of those shares will be sold by Etsy in the offering, with other shareholder selling the other 3,333,333 shares, from which Etsy will not receive any of the proceeds.

This price range puts Etsy’s valuation at round $1.2 billion.

The company made $195.59 million in revenue in 2014, up from $125 million in 2013 and $75.6 million in 2012. The majority of that money, $108.7 million, comes from its marketplace, charging users to list goods and then a percentage of the profit when they are sold. Another $82.5 million comes from "seller services," which include features like direct checkout and shipping.

At the same time, though, Etsy has seen its losses mount up as well: going up to $15.2 million, up from $2.3 million in 2012. In 2013 its net loss went all the way down to just $796,000 before jumping back up in 2014.

The main drag on its revenue is coming from general and administrative costs, which were nearly $52 million in 2014. The company also spent $39.7 million on marketing and $36.7 on product development. 

Even more worrying for investors: Etsy says it may never actually be profitable.

"We may not achieve or maintain profitability in the future," the company wrote in its SEC filing. "We expect that our operating expenses will increase substantially as we hire additional employees, increase our marketing efforts, expand our operations and continue to invest in the development of our platform, including new services and features for our members. These efforts may be more costly than we expect and our revenue may not increase sufficiently to offset these additional expenses."

In all, Etsy has 1.4 million active sellers and 19.8 million active buyers. Those sellers generated gross sales of $1.93 billion in 2014, 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

Etsy was founded in June 2005 in Brooklyn, New York and has raised over $97 million in venture capital funding from investors that included Glynn Capital Management, Index Ventures, Union Square Ventures, Accel Partners, Hubert Burda Media and Acton Capital Partners.

The company will be listed on the Nasdaq under the symbol ETSY.

Etsy going public is a bright spot on an otherwise fairly bleak IPO pipeline. 

With 34 IPOs raising $5.4 billion, the first quarter of 2015 turned out to be the least active quarter by IPO count since the first quarter of 2013, and the smallest by proceeds raised since the third quarter of 2011.

To compare: the first quarter of 2014 saw 64 deals, and $10.6 billion raised. 

(Image source: agatasartcorner.com)


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