U.S. Markets closed

Analyst Questions Etsy's Post-IPO Valuation, 'Well-Beyond' Comparisons

Mark Meadows

Etsy Inc (NASDAQ: ETSY) started trading publicly 24 hours ago, and the price quickly doubled from its $16 IPO. The company, which remains unprofitable, traded as high as 84x estimated 2015 EBITDA – a level that Wedbush said is "well beyond the high end of any comparable group." The analysts placed an "upper bound" valuation equal to Twitter Inc (NYSE: TWTR)'s 53x, with a more reasonable value equal to Alibaba Group Holding Ltd (NYSE: BABA)'s 23x.

The analysts do not view Etsy as an acquisition target since its customers and sellers are not exclusive to the platform. Instead, they cross pollinate with eBay Inc (NASDAQ: EBAY), Alibaba, and Amazon.com, Inc. (NASDAQ: AMZN).

Wedbush placed a Neutral rating on Etsy with a price target of $14, more than 50 percent below current price. The analysts said that they would revisit the rating, perhaps to issue a Sell, if "shares continue to trade at these out-of-range multiples."

Recently, Etsy traded at $27.66, down 7.8 percent on the trading session. Based on that price, Etsy's valuation is around $3.25 billion. The stock traded as high as $35.74 in the minutes after shares started trading Thursday.

See more from Benzinga

© 2015 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.