By Corrie Driebusch
Shares of Etsy Inc., an online marketplace for handmade and
vintage goods, surged Thursday, more than doubling in their market
debut.
The stock opened at $31, 94% above its initial public offering
price.
Shares recently traded at $34.10 on the Nasdaq Stock Market
under the symbol "ETSY".
Etsy priced its initial public offering at $16 a share on
Wednesday, at the high end of its range, indicating strong demand
from investors.
The deal raised about $267 million by selling 16.7 million
shares. That total doesn't count a so-called overallotment option,
which gives underwriters the opportunity to sell additional shares
under certain circumstances.
At its IPO price, Etsy had a valuation of $1.8 billion.
The blockbuster opening comes after the Brooklyn, N.Y.-based
company took a somewhat untraditional approach to its IPO.
Hearkening to its roots as an online marketplace for the masses,
the company made an effort to sell shares in its IPO to a large
swath of smaller investors. It also planned to concentrate the sale
to a small number of big investors.
The company set up a program that gives small investors the
opportunity to buy as much as $2,500 in Etsy stock in its IPO. It
also concentrated shares among a smaller number of institutional
investors than is typical in IPOs, frustrating some fund managers,
according to people familiar with the process.
Etsy was founded in June 2005 as a marketplace for handmade
goods and craft supplies. As of the end of 2014, the company had
1.4 million active sellers and 19.8 million active buyers, meaning
a customer who purchased something on the site in the past year,
according to a regulatory filing. The company makes money by
charging fees to sellers that use its platform. It doesn't produce
anything itself.
The company has incurred net losses in the past three years,
even as revenue has increased sharply. Revenue jumped by 56% in
2014, according to regulatory filings.
The deal was led by Goldman Sachs Group Inc., Morgan Stanley and
Allen & Co.
Write to Corrie Driebusch at corrie.driebusch@wsj.com
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