The Etsy IPO date is set for Thursday, April 16. The company will list on the Nasdaq under the ticker "ETSY."
The deal has become one of the most talked-about tech offerings so far this year. The Etsy IPO could become the largest technology IPO from a New York-based company since barnesandnoble.com spun off Barnes & Noble Inc. (NYSE: BKS) in 1999.
With the Etsy IPO date quickly approaching, here's everything you need to know about the deal - including whether or not you should buy Etsy stock when it starts trading...
Your Etsy IPO Questions Answered
What is the Etsy IPO price?
Etsy Inc. (Nasdaq: ETSY) set a price range of $14 to $16 a share for its IPO. The company will announce a final IPO price the evening of April 15.
How much money will the Etsy IPO raise?
Etsy will offer 16.7 million shares. At the midpoint of the price range, the Etsy IPO will raise $250 million.
How much is Etsy worth?
Following the IPO, Etsy will command a valuation of roughly $1.8 billion. That makes it the third most valuable tech IPO so far this year, behind Inovalon Holdings Inc. (Nasdaq: INOV) at $3.4 billion and GoDaddy Inc. (NYSE: GDDY) at $3 billion.
What kind of company is Etsy?
Founded in Brooklyn in 2005, Etsy began as a way for its founders to sell their handmade wooden crafts online. The company now allows users to buy and sell everything from art and photography to food and bath products.
Etsy is considered a "tech" company because of its role in e-commerce, but its culture exudes an entirely different image. Etsy has a B Corporation certification - an award companies receive when they meet certain social, environmental, transparency, and accountability standards. The company fulfills its certification by offering employee privileges like bikes for commuting to work and food waste composting.
But there are some aspects of Etsy's financial growth that trouble potential investors...take a look:
How much money does Etsy make?
Etsy's sales have been consistently strong. The company posted $195.6 million last year, marking a 56.4% increase from 2013. Etsy reported its merchants sold $895.1 million in merchandise in 2012.
Despite these impressive numbers, Etsy hasn't been profitable since its inception a decade ago. In fact, it admitted in its IPO filing that it may never be profitable in the future.
"We have a history of operating losses and we may not achieve or maintain profitability in the future," the filing said.
The company reported a net loss of $0.8 million in 2013, followed by a giant net loss of $15.2 million in 2014.
Etsy's money comes mostly from the fees users pay for buying and selling items. Management plans on spending more after the IPO to cover additional hiring and marketing costs, which means the company could see more losses.
Who are the underwriters of the Etsy IPO?
The joint underwriters for the deal are Goldman Sachs Group Inc. (NYSE: GS), Morgan Stanley (NYSE: MS), and Allen & Co.
Are there other similar companies that have held IPOs lately? How have they performed?
The tech sector has only seen three IPOs so far this year - all of which performed better than anticipated.
The GoDaddy IPO finished the first quarter with a bang. GDDY stock hit the market on March 31 and priced above its $17 to $19 range at $20. It raised $460 million and saw a first-day return of 30.8%. It now trades around $25 per share.
Inovalon debuted at $27 a share, above its increased range of $24 to $26. After raising $600 million, the data firm became the second-largest deal of the year behind Columbia Pipeline Partners LP (NYSE: CPPL).
Box Inc. (NYSE: BOX) priced above its $11 to $13 range at $14 and raked in $175 million. BOX stock has made a massive splash on the market, soaring 65.9% on its first day and up 26.1% since then.
One firm with a similar marketplace model as Etsy earned legendary status when it went public last year. Alibaba Group Holding Ltd. (NYSE: BABA) became the largest U.S. IPO ever when it raised $21.8 billion and returned 38.1% on its first day.
Now for the big question...
Should I buy Etsy stock?
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Even for companies with healthy growth prospects, IPOs aren't a good idea for retail investors.
Wall Street typically reserves popular IPOs for institutional investors willing to buy huge quantities of the stock. That means the stock will be selling off by the time we could buy into it.
But Etsy's growth remains uncertain due to its strong commitment to its community over its business. Etsy's B Corp values can both attract and repel investors in the company's pursuit to "do good" and do well.
In other words, Etsy doesn't fit in to Wall Street's focus on profits rather than social well-being. Pursuing the interests of the business could jeopardize the company's B Corp. certification.
"Our reputation could be harmed if we lose our status as a Certified B Corporation, whether by our choice or by our failure to meet B Lab's certification requirements, if that change in status were to create a perception that we are more focused on financial performance and are no longer as committed to the values shared by Certified B Corporations," the IPO filing said.
More on IPOs: This past year was the biggest the IPO market has seen since the dot-com era of 2000. And the market shows no signs of slowing down. We've pinpointed the five biggest 2015 IPOs to watch. Take a look...
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