The Etsy of Antiques

1st Dibs is (yet another) marketplace for antique goods that, like a lot of tech stocks, has been punished in recent weeks due to fears about slowing growth as the world reopens post-pandemic. The big lesson from Etsy’s rise to a $24B valuation, is that the network effects of marketplaces allow them to dominate even the nichest markets. Etsy was ignored by investors for years because of fears that the home-made crafts market wasn’t big enough to support long-term growth for Etsy. 1stDibs is facing the same public opinion, despite the antiques market being massive, and fragmented. 1stDibs gives people access to antique goods from around the world in one place, meaning you can source antiques of a particular culture without having to travel the world to find it. Further, as the pandemic permanently shifted society to a partial work-from-home model, it inspired people to improve their homes – something which 1stDibs stands to benefit from. 1stDibs attracts the wealthier end of the spectrum, with average order values of $2500+. It has huge potential ahead of it with only 70k active buyers, which even though it’s for the wealthier amongst us, is only a fraction of what’s achievable. Etsy earns a FCF margin of 25+%, but 1stDibs being early-on is understandably money-losing. Based on 1stDibs sales last year of $82m, that implies its at a current theoretical FCF multiple of just 15x. They’re on a run-rate for $100m this year, which implies 22% growth – so we have a 15x multiple for 22% growth and long-term potential – with the company’s market cap sitting at $500m, which includes $170m of cash ($0 debt), meaning the company is really worth just $330m. Etsy’s lowest ever sales multiple was 3.2 in 2017, and 1stDibs is currently at 3.5 in a market that is still historically high. Tech has struggled in recent months, but valuations are becoming very reasonable, borderline cheap, in many. Stay brave folks.