Pet Smart’s Chewy (CHWY) had a spectacular debut at the stock markets on Friday as its shares went up by 60% from its (Initial Public Offering) IPO price. The online pet brand raised $129.8 million by selling 5.6 million shares, reports Reuters.
Chewy’s IPO debut
At its opening, out of the total 46.5 million shares, Chewy offered 5.6 million shares to the public with the initial price at its IPO debut being 36$. This led to Chewy’s market value to stand at $9billion with its new IPO price, states MarketWatch.
PetSmart, the parent company of Chewy, will gain approximately $900 million from the sale of stock. Chewy can now compete with e-commerce giants like Amazon and Blue Buffalo Pet Products. “There’s a still lot of penetration and growth to be had just within the U.S. market, there’s continuing to expand internationally,” Ryan Cohen, Ex- CEO of Chewy said in an interview, reports Reuters.
All About Chewy
Founded in 2011, Chewy started in Pennsylvania as a third-party fulfilment centre where founders Ryan Cohen and Michael Day launched Chewy.com with 50 pet food brands, reported Forbes. In the beginning, the founders did not draw salaries from the company. Today, the company calls itself as the ‘largest pure-play pet e-tailer in the USA’. Chewy is a subsidiary of PetSmart and holds a 45% share in the online dog and cat food market. This equals the percentage of share held by Amazon in the same market, reports Reuters.
In 2017, PetSmart brought Chewy in 2017 with an additional $2 billion debt load. The risk was necessary to seal the deal. To its surprise, the IPO values of Chewy today stands to increase almost 3 times than PetSmart’s buying cost, which was 3.5 billion then and 9 million now. Last year, the revenues soared up to 67% of that in 2017 wherein 42% of the revenue is spawned from pet food sales. Last year in July, Chewy began pharmacy with prescription drug market generating 22% of the total revenue and 25% is gained from vet care. However, even after the whooping hike in share price, the company is yet to make a profit.
Private to Public
This year was the year of the mega-IPOs. Global giants companies like Uber and Lyft have disappointing IPO debuts. This week, Slack and Spotify might opt for a public listing of shares. “If (Chewy) can clear legal and registration hurdles, they’ll have no trouble competing out there. Chewy has a tremendous following at the consumer level. These guys know how many dogs people have, what their ages are and if you lose a dog they send a bouquet of flowers”, Phillip Cooper, an independent consultant who advises pet industry investors told Reuters.
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