Etsy’s intended entry on the NASDAQ has a lot of brokers chuckling over another so-called “hipster IPO”… with good reason. Their millions of sellers are small-scale entrepreneurs who make and sell goods out of their homes. They’re pioneers of the online craft fair. If you’re looking for a cat toy made of recycled materials or hand-woven clothing, you’re going to find it there.
Does buying ETSY stock make me a hipster?
That sounds way too ironic.
Etsy’s been strolling through their sustainably-farmed rooftop garden and collecting private equity for almost a decade. Why the sudden move to Wall Street? Did earning $195 million in revenue last year cause them to spiral into an identity crisis?
If you strip away the stitching of their thrifty, hand-made heart, Etsy is an e-commerce company. In the true spirit of a start-up, the company grew rapidly with a winning user fee/premium based profit model and healthy doses of private funding. Naturally, they’ve gotten too hot (or should I say, too cool) for venture capital.
Ironically, Etsy needs to “sell out” to institutional and retail investors in order to offer its brand and products broader reach. They’re hoping to raise $100 million in capital during the IPO. Given that almost 80% of Etsy’s sales come from repeat buyers, their loyal user base has already brought them far and it’s time to attract new buyers. Their latest spending was focused on increasing their traditional and digital marketing presence by 122% in the last year. They’re probably not done investing in large-scale, global marketing efforts.
Etsy’s NASDAQ listing positions them among the tech and e-commerce giants of the world. Sure, Etsy’s IPO won’t be an epic event like Alibaba, EBay or Amazon, but their unique position in e-commerce might pull on the heartstrings or closet crafters of the financial world.
How have other hipster companies fared out on financial markets?
In the age of the internet, there’s nothing more ironic than using a notebook. Moleskin listed on the Borso Italiana in 2013 and raised just about $314 million in capital. The company’s CEO explained the desire to explore new markets and expand distribution network.
When Apple went public in 1980, they raised over $100 million within minutes. A second offering a year later raised over $57 million just as quickly. They used the funding to develop the Lisa personal computer (sadly, a flop). A couple years later, the mysterious MacIntosh computer, whose latest version is an absolute hipster must-have, was featured in their legendary 1984 Super Bowl commercial.
In 1993, Urban Outfitters IPO’d and raised over $13 million in capital. They expanded by opening more stores. A decade later, they’ve become the most controversial clothing company in North America… besides American Apparel of course. There’s no need to fund a huge marketing budget from shareholder dollars when publicity (good or bad) is free.
Will the market love Etsy? Depends how bullish it is on hand-made bowties.