In May there was a pronounced drop in art-related share value according to Skate’s. The prices were not plummeting, but on the whole, a drop of 4.9% in one month is a cause of concern to many, as is 8.8% for the year so far. Kid you not. Most art professionals could happily plod along without paying much attention to the few art organisations that have floated as public companies. Still, taking heed of their share prices, serves as signal value for the rest of the art market—as long as we don’t suspend our rational faculties.
With the odd exception, it has only been in the past few decades that art businesses have listed on stock exchanges. It goes some way to explain why Skate’s Art Stock Index (SASI) consists of just 17 companies as listed here with their May gains or losses:
Artprice (0.3), Artnet (-6.9), ARTNEWS S.A.(-21.4), Art Vivant (1.6), Collectors Universe(-7.2), Demand media(-12.6), Etsy(-24.6), MCH Group(-2.7), Poly Culture Group(-11.7), Quarto (-0.4), Scholium Group (14.3), Seoul Auctions (6.2), Shinwa Art Auction (-9.9), Sotheby’s (5.0), Shutterstock(-5.2), Stanley Gibbons(-5.4), Weng Fine Art (19.3).
Evidently, Etsy has had a rough ride on NASDAQ. In May, the Brooklyn company lost a quarter of its market value, and 44% of its IPO value of 3 March 2015. Roughly half of the other companies in the SASI either gained or lost in stock value.
The devil’s advocate
By online subscription, Skate’s conveniently obtains alerts and figures about the aforementioned companies via a service called Oanda. To be a little mischievous, it is something we could all do on our own in a split second. But unlike Skate’s, we have not bothered to do so, which also means that we have not detected the drop in the market value. Skate’s has.
Of course, the index is beyond reproach in terms of displaying arithmetic means. However, When you use a small sample of only 17, just one of the sampled companies could pull down the average for the rest quite dramatically.
That happens to be the case of Etsy.
However, Etsy floated recently, and if you consider the classical pattern for stock exchange flotation, there might not be much to worry about at the Etsy Headquarters. First there is always that flurry and excitement when new stock is issued and prices spike. Then the market corrects itself and the price drops to a level just below its true value. Finally, the stock recovers slowly but surely.