Chewy, an online-based pet products company, is shaking up the IPO market as it seeks for a listing of $22 per share.
On Wednesday, the Florida-based e-commerce 'unicorn' initially priced its listing between $19 and $21 per share but decides to raise the figure a little bit after sensing confidence from investors. At this figure, it does not seem to come as an extreme surprise.
In recent decades, we have known how tech-based start-ups like Alibaba and SoftBank actually had higher valuations at $25 billion and $23.5 billion respectively. These figures are comparatively greater than Chewy's, which is valued at a little over $7 billion. But perhaps, it is the niching strategy of the company that ticks all the boxes; hence, a considerably impressive introductory listing price.
The company will start trading on Friday at the New York Stock Exchange with a stock symbol of 'CHWY.' Much like its contemporaries, Chewy is far from being profitable but it had already gained the confidence of investors from around the world. In 2018, the company has reported a total of $3.5 billion sales, which is a 60% increase from the previous year. Its revenue stream is spread across various categories including pet foods, veterinary care, and supplies and medicines for pets. But, what seems to attract investors is its Autoship program, which generated approximately $2.3 billion in 2018 from member subscriptions.
One of the major challenges of Chewy perhaps is gaining a greater foothold of the e-commerce market. While the company is heavily niched towards pet products, there are many more established online retailers that offer overlapping product offerings and services that Chewy offer; and this might take a toll on the process of gaining more web traffic.
However, according to Thinknum, a website dedicated to web analytics and online databasing, the company has been getting a lot of attention through visits since 2017, and the figure keeps on rising. This is an enticing snippet of how the progress of the company since it has started.
A $22 per share for a unicorn public company means something - it means that investors are confident that this company will do great in the future days. But the company must rise above expectations by pushing for more aggressive marketing strategies in order to gain more web traffic, especially with its dual-class structure IPO.
Chewy is just one of the many 'quite celebrated' unicorn companies that went public this year.
