Petsmart's Chewy IPO soars 59% in stock market debut

Chewy raises $1 billion in IPO and stock soars in trading debut

Ryan Cohen, co-founder of the newly-public online pet-product retailer Chewy, said compassion goes a long way in the world of retail, and that's what gives Chewy a leg up on Amazon (AMZN) and other e-commerce sites.

Chewy's shares rose as much as 88% in the first hour of trading Friday from the $22 offer price.

Americans spent more than $72 billion on their pets a year ago, with Chewy's 31% of USA online sales surpassed only by Amazon.com Inc.'s 55% share, according to the American Pet Products Association. The initial public offering of more than 5.6 million shares of Class A common stock was priced between $19 and $21 per share.

At $22 per share, PetSmart will receive nearly $900 million from the sale of its stock.

Shares of Chewy are expected to start trading on the New York Stock Exchange on Friday under the symbol "CHWY".

The online pet food retailer's CEO sees a brilliant future for the company.

The stock rise now puts the value of the 8-year-old company at more than $14 billion.

Chewy's sales have rocketed from $26 million to $3.5 billion between 2012 and 2018.

"And then you have companies like Zoom, and then now like Chewy, who are not yet profitable but have a very clear road to profitability", he said, adding that these companies have benefited from making clear to investors that any available funds have been reinvested into customer acquisition.

This relatively small amount of fundraising, however, has some market observers thinking Chewy isn't in the IPO game for money.

Despite this growth, Chewy has operated at a net loss of -$267.89 million in FY2018 and -$338.057 million in FY2017. Spending on pet products and services is projected to continue its historically consistent growth at a 4.2-percent CAGR from 2017 to 2022, the company said, citing Packaged Facts.

"The objective of this IPO is not to provide capital for Chewy, it's an opportunity for PetSmart to cash out on its investment", writes David Trainer, CEO of independent equity research firm, New Constructs, and a Forbes columnist.

Morgan Stanley, JPMorgan, Allen & Co and Bank of America Merrill Lynch are leading the 12-member underwriting team.

Related:

Comments

Latest news

Rebranded Redmi K20 Pro Launched As Xiaomi Mi 9T In Europe
Through its Community forum, Xiaomi announced that starting July 1st, it will be stopping the roll-out of global beta ROMs. Xiaomi also presented the new Mi Smart Door Lock, which can work with the NFC on the Mi Smart Band to open the door.

Maurizio Sarri Departs Chelsea To Become Juventus Manager
Should he get the job, the 40-year-old would become Chelsea's first permanent English manager in 23 years. Sarri's deal at Juventus runs until 2022.

Mich. Prosecutors Drop Charges In Flint Water Investigation, But Promise New Probe
Gerald Ambrose and Darnell Earley, who were state-appointed emergency managers when Flint was using river water, are also charged. My city is losing faith in our government, and that distrust was justified today when it once again failed them so miserably.

Adobe developing AI that can detect Photoshopped
To that end, Adobe researchers Richard Zhang and Oliver Wang worked with a UC Berkeley team consisting of Sheng-Yu Wang, Dr. It consists of training a Convolutional Neural Network (CNN), which is a form of deep learning, with a set of images.

Uber to start testing Flying Taxis in Melbourne
If the trial is successful, Uber plans to introduce the service to Sydney, offering flights from the CBD to the Central Coast. Flying taxis are undoubtedly an exciting concept - one that Uber has put a lot of work into making a reality.

Other news