In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche
Recode’s Rebecca Heilweil speculates Etsy’s management is trying to market to Generation Z (people under 30) through Depop. Statistics support Heilweil’s argument, Statista estimates 48.8% of Depop’s US active users are between 20 and 29.
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Etsy has proved it is incapable of making money and demonstrated that online companies can fall into a familiar retail trap.
The trap is the old one of ever-increasing sales that generate no real money. Dozens of retailers; ranging from Whole Foods to Rite Aid to Overstock.com, have fallen into over the years. The only way a company can profit from this trap is to sell itself to a larger retailer or private equity organization in search of market share or other resources.
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In particular I think eBay is in a great position to go acquiring. There are some interesting potential acquisitions for it out there; including Etsy (NASDAQ: ETSY) which had a market cap of $1.876 billion on August 9, 2017. Another is Overstock.com (NASDAQ: OSTK) – the big O had a market capitalization of $456.26 million on August 9, 2017.
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Such numbers might be fine for a pre-IPO unicorn, but they’re horrible for a publically traded company. To me at least Etsy looks like a circa 1999 dot.com company that is ready to go crash. All it would take is one negative earnings report or some really bad news to send Etsy spinning into the death spiral.
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