Etsy Sinks to Low Since IPO as Lockup Ends, Investors Bail

  • Shares fall to less than half of IPO price last April
  • Artisan marketplace fails to convince stockholders of growth

Etsy Inc.’s early investors and insiders dumped their shares on the first day they were allowed to after the online artisan goods marketplace’s initial public offering last spring.

The stock plunged 11 percent Monday to $7.44 at the close in New York, the lowest value since it started trading on April 16. That’s less than half the company’s IPO price of $16 a share and a quarter of the $30 closing price on its first day in the public market. Almost 2 million shares changed hands Monday, about double the average trading volume in the past three months, according to data compiled by Bloomberg.

Etsy has struggled to convince investors of the growth prospects for the site, which sells handmade goods like pillows embroidered with “let’s cuddle,” and personalized beard combs. At the IPO, the company pitched plans for expanding globally, yet the proportion of sales from international markets has been stagnant, according to company filings.

“The challenges facing the company continue to linger -- it’s fairly valued at this point,” said James Cakmak, an analyst for Monness, Crespi, Hardt & Co. “There’s still value there but it’s an uphill battle, so I’m not surprised that there’s pressure following the lockup expiry.”

Closely Watched

Etsy was among a relatively smaller number of technology IPOs last year and has been closely watched by other companies considering going public. Initially, investors were attracted to its prospects of sales growth, only to sour on the stock when revenue expansion slowed.

The online marketplace has had a volatile relationship with stock holders. After surging 88 percent on its first day of trading, the shares tumbled to about $13 by early July, and were back above $20 by the end of that month only to slump below $10 since November.

Etsy was one of the first “certified B Corporations” that met rigorous standards of doing good by the community, environment, employees, consumers and suppliers. That designation was questioned last year by a tax policy advocacy group after Bloomberg reported that Etsy, which promised to be a beacon for transparency as a public company, implemented a strategy that shrouds its offshore tax-cutting arrangements in secrecy.

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