
Etsy stock has lost 76% of its value in 9 months - megafounder
https://www.google.com/finance?q=NASDAQ%3AETSY&ei=LWGZVoHMOtSSUMmBn6gL
======
profinger
I'm not surprised at all. Etsy used to be user based and hand made. Now it's
just another market place. They still act like they try to enforce "non-mass-
produced" but there are countless examples of the opposite being true. Places
where people have directly reported instances of this and the problem is still
present.

I think the problem is that they stopped caring about their user base and,
therefore, became less ubiquitous and people saw that and were like "oh.. time
to value them lower.."

~~~
jonnathanson
An alternative hypothesis: maybe they reached the limits of the scalable,
addressable, growth market for small-batch, handmade goods?

~~~
vonklaus
An alernative hypothesis is that etsy was a predominently female community
that (kind of conjecture) used to have a comminty driven social aspect. As it
became more of a market place, and less of about discovery and community, most
of those people moved to the "better version" of etsy.

Now, pinterest is the best of both worlds, a place full of like minded people
driven by discovery of cool things (what etsy was) and the marketplace is like
central.

I suppose gender doesn't matter, but it is worth mentioning these sites have a
greater population of women and most of the products I have seen are jewelry,
clothing or crafts that are made by women and likely bought by their peers.

I suspect, that as it became less trendy and creative, and more of a store,
most of the top people left and went to pinterest. When a community has a
their top talent leave, and their competitors are more in line with their
customers expectations, then thay community is through.

Pinterest isnt something I use, but I have seen some cool designs and for
discovery of certain things, it seems great.

Tl; dr, as an outsider, i think thar pinterest out etsy'd etsy

~~~
jonnathanson
But Etsy was always a marketplace. It was never a curation site _per se_.
Unless I'm missing something here? If anything, I see Etsy and Pinterest as
much more complementary than competitive.

~~~
vonklaus
I, again never really used them, but I think it was likely a case of Etsy not
realizing they were pinterest.

People went to see fashion, crafts and home made cool things. They started
their own stores and shared in that experience.

Etsy never cspitalized on this. Pinterest, is the opposite. It was meant as an
awesome place to find cool stuff, then, while people are admiring it, they did
a deal with stripe.

Now Patrick Collison brings them up sometimes in interviews, and both
Collisons did a class with Ben Silberman in Sam Altmans stanford class.

So, point is Pinterest attracted all the people who made cool shit. Etsy
attracted all the people who bought it.

Match point.

~~~
jonnathanson
It's an interesting way to look at it, and I guess I'd never thought of it
that way. I'm still not convinced Pinterest and Etsy are substitutes, or at
least not that they always have been. But I do agree that (from what I can
tell) Pinterest is the more ambitious and strategic company, and that it has
Etsy in a corner it can easily choose to close off at this stage in the game.

------
analyst74
As they always say, this time is different.

My opinion is that the tech sector has greatly expanded since 2000, not just
in amount of investment available, but also types of business tech companies
are actually in.

So maybe there is a web/ad bubble and it might pop, but how much that affects
individual company is more nuanced.

Unsophisticated investors might still lump Google/Twitter/Tesla/AMD into the
same "tech sector", but they will find the signal they receive is very mixed
and difficult to analyze.

~~~
vonklaus
i have been thinking about this a lot. Peter Theil talks a lot about paypal
when they were burning cash, but they had finally started to get the business
fundamentals together. He calculated, i am approximating but it was close to,
80% of the companies worth came after 20 years.

My thinking is that public markets are shitty, so almost all of the value
capture takes place way before a company is worth it, it stays private a long
time, goes public, then slowly grows for 5 years fails to adapt and dies. Look
at google. They know search is about to change majorly, they have already spun
into a meta-architecture. Doing things quickly, capturing that value, and then
adapting is the only way to survive. If you do adapt enough to survive, you
are a conpletely different conpany than when you started. If you dont, all the
value has been captured by provate markets, the company gets sluggish, and
isnt that profitable for "retail investors".

Amazon sort of the one exception. They saw the world how it is now over 10+
years ago, and are still competing and incrsting in growth because thats how
you win.

You have to own all the infrastructure, so you dont have to work as hard.

Either way, uber is more like ebay than like lyft. Sectors have subsectors
because everything is close to winner take all.

You analyze by looking at what the smart people are doung.

Stripe = infrastructure Aws = end to end automated everything Google is
organizing as a think tank/incubator

Ycombinator is funding smart crazy people who move fast.

~~~
tedmiston
> Look at google. They know search is about to change majorly, they have
> already spun into a meta-architecture.

In what way is search about to change majorly?

To me that seemed more like a way to keep experimental projects without
affecting Google as a stock.

~~~
vonklaus
My personal opinion is that open sourcing googlebot[0] and tensorflow, as well
as a the numerous other tools like elastic search and frameworks like hadoop
make it pretty easy to make narrow search tools.

So someone like me, a pretty shitty programmer, can use an language built on
top of googlebot, like nodejs, and just index the stuff I care about and
instead of that information being returned to google, I can just send it back
to bots viewport directly and not even see the webpage, just the info if I
want.

The problem is discovery (what google solved in 1999), no one knew where to
find websites, like not even info, just what sites even were on the web. This
is a huge pain point again because while there are a lot of great websites
there are a ton of shitty ones. This is pretty obvious if you look at sites
like reddit or hacker news. They are developed around the idea of aggregating
good resources because there are so many it is overwhelming.

So, I think, that of the 50% of the people that are already running googlebot,
some subset will start probably using it to get info they care about.
Eventually, someone will write code you can use to make this easier for normal
people, and then google whill either sell the silos of info to them instead of
advertising, or use it in it's new meta structure to solve big problems.

[0][http://ipullrank.com/googlebot-is-chrome/](http://ipullrank.com/googlebot-
is-chrome/) [1][http://www.sitepoint.com/browser-trends-
august-2015-chrome-e...](http://www.sitepoint.com/browser-trends-
august-2015-chrome-exceeds-50/)

~~~
ehnto
I definitely agree on your points about the majority of the web being low
quality noise. Not just in a "humans produce garbage" sense but also that
various SEO and marketing techniques have created a sea of automatically
generated nonsense content that search engines now have to wade through.

I also find searching for anything remotely niche has become extremely
difficult because of this. Example being finding instructions on how to
install some bike parts today. There were articles about the specific parts
eventually, but only after significant iterations of my search terms and
wading through all the matches from people targeting those keywords to sell
product.

I feel like Google specifically are failing to wade through the sea of noise,
and as a result it's becoming less and less useful.

It works well for things like programming troubleshooting, because we have
high signal resources (stack overflow, for example) that often have the
answers we need. But for anything outside of developer specific topics I
usually have a really hard time finding anything useful and not spammy.

I now rely on having stumbled on some good sources, and sticking to reading
those, rather than googling subject matters these days.

HN, Reddit and various news and tech sites curate content as you said, but the
problem is that this creates a bubble and the beautiful world of exploration
and learning that the web was all about disappears.

I am excited to see how we solve this problem, and who solves it.

In regards to Google Search going away, I feel like even if their search
engine failed, the AdSense network would live on, and that is where the
majority of their income comes from.

I'm not sure if the majority of it comes from Network ads (ads displayed on
other sites) or search ads (ads displayed in their search engine). That might
be informative of where they plan to focus their energies over the coming
decades.

~~~
njharman
> I feel like Google specifically are failing to wade through the sea of
> noise, and as a result it's becoming less and less useful.

A problem is "useful to google" means serving you all those sites trying to
sell you stuff and keeping you "on the web" longer so they can show you more
ads and extract more data from your activities. They have to balance that with
actually giving you what is useful to you.

------
chris_wot
The lockup agreement expired. Looks like employees and executives are selling
up big time.

[http://www.marketwatch.com/story/etsy-shares-fall-after-
expi...](http://www.marketwatch.com/story/etsy-shares-fall-after-expiration-
of-lockup-agreement-2016-01-11)

~~~
joeblau
That's crazy. The employees owners just gutted the value of their own company.

~~~
_rpd
Alternatively, they are informing the market of their perceived value of the
company.

~~~
x0x0
Or rationally reacting to having their net worth concentrated nearly entirely
in a single security. Contrary to essentially all financial advice.

------
jonknee
I wouldn't be surprised if Etsy is acquired now that the share price is beaten
down. Seems like a good fit for eBay (it would provide much needed relevance)
or Amazon. It's a good brand name, but not much else.

~~~
BinaryIdiot
My thoughts exactly! Etsy seems like a perfect business for someone like eBay
to snap up. Though I could see Amazon having an interest, too.

~~~
winterchil
I understand the product-fit, but what incremental value does Etsy bring to
either of those companies?

~~~
BinaryIdiot
Neither of them have marketplaces for custom made goods (for the most part at
least compared to etsy) and both are in competition with each other to expand
their marketplaces to as far as they can go.

Seems like it would be a good fit to me. I'm not sure how it ultimately gets
integrated it (maybe it doesn't?).

~~~
narrowrail
What about Amazon? They launched a competing marketplace in October:

[http://www.nytimes.com/2015/10/08/business/amazon-
challenges...](http://www.nytimes.com/2015/10/08/business/amazon-challenges-
etsy-with-strictly-handmade-marketplace.html)

But, don't let that stop you...

~~~
BinaryIdiot
I didn't even know about that and neither did my wife who is obsessed with
etsy. I'm not sure Amazon by itself is going to draw in the huge amount of
users etsy as brought in; I could easily see etsy augmenting their existing
offering.

Just my opinion though. Who knows for real.

------
jheriko
"over-hyped gimmicky thing trendy with hipsters out-of-touch with reality
starts to fail over short period of time"

not surprised one bit. i echo the sentiment of other commenters who give other
examples.

this is only surprising if you are also out of touch with reality

~~~
flashman
"trendy with hipsters out-of-touch with reality"

If only you knew some actual Etsy users. Many are suburban mothers that like
to craft.

~~~
jheriko
thats not entirely what i was getting at... but i take the criticism. i don't
know very much. mainly because of all the hype putting me off...

------
maxxxxx
Isn't that the strategy these days? Extract as much value from a company and
only then go public?

~~~
w1ntermute
Yep, IPOs are the new down rounds. The founders/early investors sell shares on
the private secondary market pre-IPO, leaving the public and the employees
holding the bag after the IPO.

~~~
shostack
Are there other instances of this happening in the secondary markets?

~~~
rdl
Square, Box.

------
adventured
And they're actually a better value today thanks to the proper correction,
than they were at the point of IPO, despite what the analysts and pumpers (or
shorts) would tell you.

Now they're trading for 2.x times sales for fiscal 2015. They have 1/3 of
their market cap in cash. And they're accumulating cash from operations rather
than burning it. The value proposition on the stock is dramatically higher
than it was when the hype was on the moon.

------
theseatoms
This doesn't bode well for other publicly traded B corporations,
unfortunately.

[https://en.wikipedia.org/wiki/Benefit_corporation](https://en.wikipedia.org/wiki/Benefit_corporation)

~~~
vanattab
Can you expand on why this a bad sign for B Corps more so then C Corps? Honest
question. Before reading the link I did not know the difference between B and
C.

~~~
Dwolb
A simple explanation is B-corps can have a charter which is at odds with the
interests of shareholders while C-corps are fully aligned with 'maximizing
shareholder value'

e.g. "I've created a B-corp, named Betsy, which has the distinct mission of
making it viable for more people to choose craftsmanship as a career. I cannot
be sued for adhering to my charter in good faith so one thing I can offer all
sellers is an insurance plan even if this move has a net negative impact on
profit."

This can be contrasted to a C-corp in which its officers could technically be
sued by acting in ways which are value or profit-destroying for the firm.

~~~
forgotpasswd3x
Your simple explanation still fails to prove that's why Etsy is losing so much
value.

------
dtx
speciality ecommerce has always been a moody market and a company like Etsy
getting traded at this value is still just sentimental value. The company has
had negative margins for a while, along with negative returns on all it's
assets.

Operating cash flow is a mere 2% of the current market cap. This defines
shambles unless it can really turn it's fortune around in '16-17.

------
marme
etsy is clear case of poor management, just taking a brief look at their
financial statements it is clear they are doing something clearly wrong. Their
revenue is growing but their expenses are growing at the same rate so they
remain unprofitable. from 2014 to 2015 revenue grew from 29 million to 45
million per quarter while general expenses grew from 22 million to 31 million.
Amazon is another company that does this but at least they have the sense to
keep the company slightly in the black to slowly gain small amount of cash
reserves, etsy is just burning through their capital for no reason, they earn
plenty of revenue to be able to turn a profit

~~~
milesskorpen
Amazon is frequently in the red.

~~~
dplgk
A couple years ago I met with the guy who runs tech there and he said they had
150 developers....! How many do they have now and what the heck are they
working on?

~~~
perseusprime11
They are reinventing the wheel by building an ecommerce site.

------
sly_foxx
They can obviously make money by raising a transaction fee a little bit from
3.5% to maybe 5%-7%. eBay has done it to 10% + PayPal fees and they are making
billions in net profits.

------
sulam
To be clear, it's lost XX% of it's market cap. The market cap is a knowingly-
flawed assessment of earnings potential for a company. Its actual value is
probably unchanged.

~~~
tyre
Market cap is just value of a single share * number of shares outstanding. Do
you have a better way of valuing a publicly-traded company?

When you say "its actual value is probably unchanged", what value are you
talking about?

If you think there is a disconnect between share price and value (however
you're measuring that), then it is an excellent opportunity to arbitrage an
inefficient market.

~~~
curun1r
The way I read his comment was a difference between perceived value and actual
value. Market share is equivalent to perceived value, not actual value. So the
comment was remarking that the drop in share price could be the result of
inflated expectations becoming more realistic rather than a loss of actual
value of the company.

The biggest difference between perceived and actual value that I'm aware of is
the tulip mania that early 1600s. In hindsight, it's pretty obvious that
flowers didn't become less valuable in the short time period between the
height and the collapse. Any utility or purpose they had, other than resale,
was retained in its entirety. But the price difference was massive. There are
many who believe we're in our own era of unicorn mania where it will become
apparent, again in hindsight, that they were never as valuable as people made
them out to be.

~~~
hueving
What are you talking about? The value to the people is what they will pay for
it. If nobody is buying it at a certain price, then there is nobody that feels
it has value at or above that price. There is no 'real value' of something vs
its market value.

~~~
avalaunch
I think the distinction being made is the value of the stock vs the value of
the company, which is not always perfectly in sync. That's why, at any given
time, a stock can be undervalued or overvalued. For example, I think you'd be
hard pressed to state that the value of a stock right before a company
announces unexpected losses is representative of the actual value of the
company. The perceived value, prior to the announcement, is too high.

------
perseusprime11
The stock should trade at $2 if you look at their financials. Growth stalled a
while back. Etsy will never be able to compete with Pinterest. This is a $100
million dollar company in the guise of $1b. Going the same way as gilt group.

------
benhebert
What is etsy spending their money on? What's their main expense? Talent?

------
bigB
All comes down to Monetization really.....If you dont find a good way to make
a profit stock price will fall. Investors will only wait a certain amount of
time before losing faith and interest.

------
ratonofx
as a two-sided marketplace, etsy got a wrong balance between vendors and
buyers... Last time I did read they speaking about making a lot of money
offering vendors' services... They abandoned the crowdsource, the crowd
abandoned them..

------
mw67
There is no market. People want an iPhone 6, not a wooden necklace

------
aszantu
so, where do I turn now if I want to sell my prints?

------
kelseydh
Good time to buy.

------
w1ntermute
Angie's List: from $28 in Jul 2013 to $9[0]

Box: from $24 in Jan 2015 to $10[1]

GoPro: from $87 in Oct 2014 to $11[2]

Groupon: from $26 in Nov 2011 to $2.60[3]

GrubHub: from $46 in Apr 2015 to $21[4]

Twitter: from $70 in Jan 2014 to $18[5]

Yelp: from $97 in Mar 2014 to $21[6]

Zillow: from $121 in Feb 2015 to $22[7]

Zynga: from $15 in Mar 2012 to $2[8]

0:
[http://www.google.com/finance?q=ANGI](http://www.google.com/finance?q=ANGI)

1: [http://www.google.com/finance?q=BOX](http://www.google.com/finance?q=BOX)

2:
[http://www.google.com/finance?q=GPRO](http://www.google.com/finance?q=GPRO)

3:
[http://www.google.com/finance?q=GRPN](http://www.google.com/finance?q=GRPN)

4:
[http://www.google.com/finance?q=GRUB](http://www.google.com/finance?q=GRUB)

5:
[http://www.google.com/finance?q=TWTR](http://www.google.com/finance?q=TWTR)

6:
[http://www.google.com/finance?q=YELP](http://www.google.com/finance?q=YELP)

7:
[http://www.google.com/finance?q=NASDAQ:ZG](http://www.google.com/finance?q=NASDAQ:ZG)

8:
[http://www.google.com/finance?q=ZNGA](http://www.google.com/finance?q=ZNGA)

~~~
replicatorblog
Facebook: $38.23 to $94.97 (May '12 - present) [0]

Wayfair: $32.18 to $37.81 (Oct '14 - present)[1]

TripAdvisor: $27.91 to $70.63 (Dec '11 - Present)[2]

Hubspot: $29.05 to $50.04 (Oct '14 - Present) [3]

Tesla: $10.40 to $204.99 (Jul '10 - Present ) [4]

ZenDesk: $15.25 to $23.10 (May '14 - Present) [5]

LinkedIn: $90.09 to $196.10 (May '11 - Present) [6]

0:
[https://www.google.com/finance?q=facebook&ei=OGyZVsiyEYqNmAG...](https://www.google.com/finance?q=facebook&ei=OGyZVsiyEYqNmAGh5pu4Bw)

1:
[https://www.google.com/finance?q=wayfair&ei=k22ZVqnFKoShmAHG...](https://www.google.com/finance?q=wayfair&ei=k22ZVqnFKoShmAHGjpq4Bw)

2:
[https://www.google.com/finance?q=NASDAQ%3ATRIP&ei=DG2ZVpGGGI...](https://www.google.com/finance?q=NASDAQ%3ATRIP&ei=DG2ZVpGGGImamAHg943IBw)

3:
[https://www.google.com/finance?q=hubspot&ei=2m2ZVvmlEImamAHg...](https://www.google.com/finance?q=hubspot&ei=2m2ZVvmlEImamAHg943IBw)

4:
[https://www.google.com/finance?q=tesla&ei=Am6ZVuHRBNGzmAH9n7...](https://www.google.com/finance?q=tesla&ei=Am6ZVuHRBNGzmAH9n7SwBw)

5: [https://www.google.com/finance?q=zendesk&ei=UnGZVtK-
Go21mAGr...](https://www.google.com/finance?q=zendesk&ei=UnGZVtK-
Go21mAGr75ywBw)

6:
[https://www.google.com/finance?q=NYSE%3ALNKD&ei=ZXGZVqCWA4qH...](https://www.google.com/finance?q=NYSE%3ALNKD&ei=ZXGZVqCWA4qHmAGg4IH4Bw)

~~~
seizethecheese
Cherrypicked vs. cherrypicked.

The only way to settle this is for someone to make a weighted index of tech
IPOs in the last n years.

~~~
jonathankoren
weighted how?

~~~
supster
free float capitalization (e.g.
[http://www.renaissancecapital.com/index/ipousa.aspx](http://www.renaissancecapital.com/index/ipousa.aspx))

