1stdibs (DIBS) wants to be the Amazon of luxury and designer goods, like vintage furniture, home décor, jewelry, watches, art, and fashion, suggests Michael Brush, growth stock specialist and editor of Brush Up on Stocks.
The market for luxury design products has historically been fragmented and highly localized, made up of lots of independent galleries, boutiques, and auction houses. 1stdibs.com claims it is a disrupter in a space historically dominated by many local brick and mortar operations.
“We created a single online marketplace that consolidates previously isolated sellers and buyers on a global scale,” says the company.
“By removing geographic barriers and providing inspiration and discovery, we have disrupted this industry and made 1stDibs the go-to online destination for luxury design products.” Last year, the average distance between buyers and sellers was nearly 2500 miles.
The company vets sellers. which are typically small businesses, so it brings an element of trust to transactions. It has about 4,200 seller accounts in fifty-five countries and around 3.5 million users.
Not all of them are buyers. In 2020, it had around 58,000 active buyers with an average purchase per year of around $5,500. Interior designers account for a large portion of buyers.
The company claims to benefit from network effects, which means a growing list of sellers attract more buyers, and more buyers encourage more high-quality sellers to join. This is the proverbial flywheel effect that investors look like to see.
Growth has been strong. Gross merchandise value (GMV) grew to $342.6 million in 2020 from $13.8 million in 2013, for a CAGR of 58%. First quarter GMV grew 64% to $113.7 million. Net revenue grew 16% last year to $81.9 million. First quarter revenue grew 43% year over year to $25.5 million.
Bain estimates the market for high-quality design furniture and homewares, fine art, and watches and jewelry is worth$129 billion in annual sales. This suggests room for much more growth.
1stdibs.com is another busted IPO, meaning it trades below its IPO price. It often pays to wait for IPOs to turn into busted IPOs, and that is the case here. 1stdibs.com had an impressive array of bankers on the IPO including BofA Securities, Barclays, Evercore ISI and William Blair.
The CEO just bought a sizable $1.5 million worth of stock at $14.40 to $15.84, the strictly speaking buy limit range for conservative buyers. Otherwise, consider buying here and adding on weakness, for a multiyear hold.