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Comment by sulam | Hacker News Reader

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.

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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.

I _know_ there's a disconnect between the share price and the value, I just don't know what direction it's going to go in. This is why straddles are so much fun. :)

The efficiency of markets is widely overrated.

It's super annoying when there's a strong and confident initial comment and the clarifying comment is jibber jabber.

http://www.investopedia.com/terms/s/straddle.asp

Yes, I know what a straddle is, but it has almost nothing to do with the initial claim: "Its actual value is probably unchanged."

I agree with you, and something I am actively working on. That said, anecdotally, the market seems to overvalue many things a medium amount, and greatly undervalue a small few things by an order of magnitude.

So while I would say, sure, the market cap of a company, in what could pitentially br another downturn, is not exactly precision science, this company is in bad shape.

Huge successful direct conpetitor: pinterest.

Massive successful competitors generally like the amazon, the entire internet, and most flea markets and shops.

Negative trending community; shrinking

Not profitable

Publicly traded.

also, on a final point. Even when markets are wrong, which I dont think is the case here,they can become correct by driving the company the direction they expect it to go.

So on balance, you're correct. Specifically, I wouldn't buy their stock.

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.

This wouldn't apply to Bitcoin. Any utility or purpose in a bitcoin is entirely in terms of its perceived value.

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.

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.

Sometimes things have an intrinsic value, often because of some utility that they provide. Sometimes the only value is the belief that someone else will pay more for it. [1] When it's the latter there's a difference between the real value and the perceived value. This is why we use the term "correction" to describe a situation where the perceived price falls to match the "correct" price.

[1] https://en.wikipedia.org/wiki/Greater_fool_theory

> Do you have a better way of valuing a publicly-traded company?

I do, but it involves time travel. In 1981, Shiller published "Do Stock Prices Move Too Much to be Justified by Subsequent Dividends?" ( https://www.aeaweb.org/aer/top20/71.3.421-436.pdf ) in which he compares index prices to their ten year dividend earnings, ex post. Volatility of prices is high, but the dividend streams are not.

What this suggests is that price tends to react to short term news far more strongly than dividends would suggest is reasonable. What it doesn't tell us is whether the shift in price is diverging from reality, or converging on it.

The value of Etsy changed when Amazon entered its space. It is objectively worth less now that the 800 lb gorilla has decided to eat Etsy's lunch.

Amazon fails to eat other companies lunch more often than it succeeds in fact.

See: search, auctions, classified ads, smart phones, etc.

I don't think this has much to do with it. Amazon's attempt was really half-assed (classic Amazon, to be honest). The only mention of Handmade on the Amazon homepage is in the "Search by Category" dropdown.

The real issue in my opinion is that Etsy discovered that they couldn't keep growing without opening their doors to cheap non-handmade shit. Which they've done. And their search/discoverability is absolutely awful.

My partner lists her truly handmade products on Etsy but only as an afterthought. As the amount of garbage on Etsy has increased, her views/sales have dropped. She has put all of her effort into getting sales through her own website, where at least she's in control.

I think the ones who really ate their lunch were companies like Shopify.

Speaking with some knowledge of the company, it boggles the mind a little that they failed to snap up Shopify (or more likely one of that company's scrappier competitors) when Etsy got like $27M in 2008. Every single time Etsy didn't help a seller set up their own e-commerce site, someone else did, and this happened hundreds of thousands of times. And is still happening.

But Etsy struggled with leadership and technical problems in those days that were really serious, and not easily solved.

But in the early days many Etsy sellers didn't have their own e-commerce sites. A lot of them didn't even have websites outside of Etsy, often just a Facebook page. I'm not sure that's changed much.

You're mistaken. Etsy was for many people their first steps at e-commerce, but every seller who made sales on Etsy has asked themselves "What about all the people not on Etsy? How do I reach them?".

In 2005 Etsy's advantage was that creating your own standalone shop was hard, expensive, and ineffective. They shuffled CEO's while Shopify, BigCartel, WooCommerce, BigCommerce, and many others solved those problems. And Kickstarter proved you could make a lot of money without losing your cool indie cred.

There has always been a disconnect between what Etsy wanted to be (and there have been multiple versions of that) and what it's sellers (who are its customers) wanted. That grew into a chasm so big that Amazon saw light shining through it.

It would be interesting to see data to support whether this hypothesis holds up.

I have two gut feelings:

1. Hobbyist Etsy sellers don't dedicate the time and/or lack the business savvy to be running additional sales channels outside of Etsy. Additionally, even setting up a Shopify, etc. store requires some technical ability that you or I take for granted.

2. Semi-professional Etsy sellers, for example, those coming from operating eBay or Amazon Stores, were already using their other channels before Etsy. So they were sophisticated enough that it was cheap/easy to have someone whip up an osCommerce + PayPal site for them. I did this personally for a few clients already successfully selling on forums between 2005-2008.

IPO $16

Peak $34 in May

down to $14 in July

bounced but back to $14 in August

flat till October when Amazon entered now down to $7

Jeff Reeves at InvestorPlace [1] caled it "the biggest joke on Wall Street in May"

[1] http://investorplace.com/2015/05/etsy-stock/

Revenue growth flat and loosing money for the last four quarters doesn't seem to good.

https://www.google.com/finance?q=NASDAQ%3AETSY&fstype=ii&ei=...

Oh my god, seriously?!

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