Can Etsy Jibe With Wall Street?

It is seldom that you come across a company with a conscience. They usually focus on the goodness of capitalism rather than on the related stigmas (like selfishness, greed and profit maximization).

Such companies seek to combine the principles of corporate commerce with conscious capitalism.

On Wednesday, Etsy Inc., an online crafts marketplace, priced its initial public offering at $16 a share (at the high end of its initial range of $14- $16), making it the largest certified socially-responsible company (or B- Corporation) to go public in the U.S. (according to CNN money). This price gives the company a valuation of $1.78 billion.

As this B-Corporation gets ready to launch its IPO today (with the ticker ETSY), it will be interesting to see if it’s able to keep pace with other competing businesses on Wall Street.

Etsy & Wall Street

Etsy is known for providing customers with unique goods, goods that are not produced in masses. Its business, in fact, has flourished, partly due to its loyal customer base.

The question that Etsy faces right now is how it will increase the size of its business, if it wants to maintain its identity of providing unique goods as losing customer loyalty to mass production could do severe harm to its business.

Kathleen Smith, a principal at Renaissance Capital, is of the opinion that Investors need to assess "the confidence that this company can scale without going to the dark side of full commercialism."

Etsy understands that its focus on long term sustainability might not go down well with the Wall Street, which is concerned about short-or medium-term financial performance.

Let’s look at an example provided by CNN Money. “Etsy may want to do things that won't please investors who mostly care about the stock price. For example, Etsy said it could invest in alternative forms of shipping that reduce the impact on the environment but are most expensive.”

Besides this, let’s also keep in mind that after becoming a public company, Etsy will be subject to a lot of scrutiny. This will eventually call for the company to become profitable. Etsy has posted net losses in each of the past three years. The site, however, is becoming increasingly popular -- its revenues have been on the rise having increased 56% last year to $195.6 million.

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