Etsy Stocks: The Worst Investment of 2015?

Etsy logo. Courtesy of Etsy.

I’ll admit it: I thought buying Etsy stocks was going to be a great idea.

On the day the company went public, one of my friends, a successful artist and illustrator who actually makes his entire living off of his Etsy sales, was there at the New York Stock Exchange when they rang the opening bell.

Seeing him on TV, realizing his dreams, inspired me to buy into them as well.

Initially opening at $30 per share, I snatched up what I could, then encouraged my 94-year-old, market-loving Grandpa to do the same.  Thankfully he either didn’t really hear my advice or sagely acted like he didn’t.  Maybe that’s why he’s been successful in his investments and me..well, dismally so.

The problems started almost immediately, with the stock dropping sharply by almost 25% in the first week.  Still, the optimism was strong–surely this was a fluke and before long I’d be bragging about how I bought at the IPO price and was now swimming in it.

Except, that’s completely not what happened.

The stock sank lower and lower, crippled by threats of lawsuits and other legal action against the company, mostly in the realm of copyright infringement and counterfeit production claims.  It sank to a summer time low in July of $13.32, before experiencing an inexplicable and short-lived rebound that brought it up closer between the $18 and $19 range.  Not a recovery by any means, but at least it wasn’t as dismal as it all seemed before.

Then, one hot August day the stock fell again roughly 25%.

Watching was painful.  I thought about my optimistic friend, who no doubt had poured tons of money into buying into the company that had made him pseudo-famous in the Etsy art community.  I don’t know how much he bought, or at what price, but he was no doubt wondering where it had all gone wrong.

As the end of summer days drifted by and turned to a cooler fall, the stock bled out slowly.  Dropping a bit here, a bit there, before finding itself surpassing its summer low.  What started off as a promising hot stock in 2015, has ended in one of the biggest IPO launch failures of all time.  Today, it was scrapping the bottom of the barrel, ending trading at just $9.31 a share, meaning that it’s fallen over 66% percent since its debut.

It joins an infamous list of other failed 2015 IPOs, including Zosano Pharma Corp, which lost around 30%, Bellerophon Terapeutics, and MaxPoint Interactive, Inc.

One of the top performing IPOs is the hip burger joint called “Shake Shack” which came out guns blazing at the end of January 2015.  The stock opened at a modest $21 per share, but is now trading up around $45, down from a high of $75 in the first quarter.

The problem with buying IPOs is while that the company may be established in the business world, no one really knows how they are going to weather the storm of the stock market.  Everyone hopes to hit it big on IPOs that skyrocket in price, but it’s hard to say which ones are going to do the opposite.  In the end, when my Grandpa brings up my Etsy recommendation, I’ve practiced pasting on a simple smile and pretending like I can’t hear him.