- ETSY is now down 10% from a post-IPO opening trade of $31.00, and 22% from a Thursday high of $35.74. Shares remain up 74% from their $16 IPO price.
- With the craft/vintage goods marketplace still trading for nearly 16x 2014 sales, valuation concerns have been easy to find. Wedbush, which launched coverage with a Neutral rating before the IPO, notes Etsy traded as high as 84x 2015E EBITDA, a level declared to be "well beyond the high end of any comparable group."
- Wedbush's $14 target is equal to 23x 2016E EBITDA (in-line with Alibaba). Aside from valuation, the firm is worried about seller practices drawing more scrutiny. "We have identified several examples of sellers sourcing from Alibaba (contrary to Etsy guidelines and sometimes at markups exceeding 30,000%) and possible trademark infringement."
- It's also concerned about Etsy's long-term market size. "We believe Etsy benefits from the difference in what individuals expect to receive for their work time versus their free time, as well as the lack of overhead, resulting in lower prices ... However, we believe this arbitrage is only possible in limited categories of goods, thus capping Etsy's ultimate growth."
- Bulls have focused on Etsy's strong top-line growth (56% in 2014), cult following, and healthy mobile exposure (36% of 2014 GMS and 53% of visits). SA author M Nunez, after going through the S-1: "I feel the key word for this company is uniqueness, it has done a phenomenal job creating a true ecosystem of buyers and sellers of unique products and has been able to capitalize on that in a significant way."