EToys Raises $166.4 Million in IPO

Santa Monica-based EToys raised $166.4 million in an initial public offering Wednesday that valued the online toy retailer at slightly more than $2 billion. The company’s market value is expected to soar even higher today, when EToys’ stock trades for the first time on Nasdaq.

EToys sold 8.32 million shares at $20 each, twice as high as originally expected. Lead underwriter Goldman Sachs raised the offering price Wednesday from the $10-to-$12 range. The company plans to use the proceeds to fund its continuing operations.

Gail Bronson, senior analyst at IPO Monitor in Palo Alto, said she expects EToys’ share price to more than double in its first day of trading.

“This is going to be one of the hottest deals to date,” Bronson said. “They’ve totally stolen the show from Toys R Us. They’ve just done everything right.”

In two years, EToys has become the Web’s biggest toy store. The company stocks more than 9,500 products and 750 brands, including Mattel, Hasbro and Lego. It has sold toys, video games, software and music to more than 365,000 customers.

Like most high-flying Internet companies, EToys has racked up significant losses. In registration documents filed with the Securities and Exchange Commission, the company said it has lost $30.8 million since its inception. Last year the company recorded sales of $24 million, mostly during the quarter that included Christmas.

The offering made a multimillionaire out of Toby Lenk, the 37-year-old former Disney executive who founded EToys in 1997. His shares are worth nearly $150 million based on the offering price.

But his stake is dwarfed by the shares held by Idealab, the Pasadena e-commerce incubator that helped create the company. Idealab’s stake is worth $366.4 million, and its investment arm holds another $140 million in the company. Among other investors, Intel’s stake is worth $154 million.

EToys will trade under the ticker symbol ETYS.