🐶 Another Big Day For Animal Spirits?

WOOF: Third time is indeed a charm! In its third tryst with the markets, Petco raised $864M and surged over 63%

Hey Global Investor, here’s what you need to know before the US markets open.

Market Snapshot 📈

S&P 500 (Yesterday’s Close) 3,795.54 −14.30 (0.38%)

NASDAQ (Yesterday’s Close) 13,112.64 −16.31 (0.12%)

FTSE 100 (5 PM IST) 6741.57 -60.39 (-0.88%)

NIFTY 50 (Today’s Close) 14,433.70 −161.90 (1.11%)

USDINR (5 PM IST) 73.03 (1 Year +3.33%)

Another Big Day For Animal Spirits?!

Third time is indeed a charm! In its third tryst with the markets, Petco raised $864M and surged over 63%

Background: Founded in 1965, San Diego-based mail-order veterinary supplier Petco morphed into America’s one-stop-shop for pet care. Petco first went public in 1994, was taken private in 2000, went public again in early 2002 raising $275M, and again private in 2006.

Then owners TPG Capital and Leonard Green & Partners sold the company to CVC Capital Partners and Canada Pension Plan Investment Board for $4.6 billion. After six years, Petco went public again yesterday, with the market valuing the company at $6.4B.

What’s the market size you ask? Last year, pet owners lavished $99B on their pooches and kitties – everything from treats to meds to pet spas to pet sitting. As it positioned itself for all things pets, Petco rechristened itself last year to Petco Health and Wellness Co. Inc.

Now, after six years, the company decided to go public again.

What is Happening? Petco’s revenue rose 9% to $3.6B in ¾ year ended Oct. 31, 2020, compared to the prior year. The $20M loss in the same period compares favorably to the $88M loss Y-o-Y. Petco had priced its IPO at $18 per share. Not surprisingly, the stock opened at $26, 44% above the IPO price. Having raised $864M selling 48M shares, the company plans to use the money to pay off debt.

About 70% of its pet products are exclusive to its stores, such as private-label food brands. The company has been adding in-store pet clinics at a furious pace as well. The insatiable demand for pet accessories and supplies means competition is also stiff. Chewy, the online pet store’s subscription model has proved to be a hit with pet owners as it automatically replenishes pet supplies. Dog treat provider Barkbox is planning to go public by merging with a SPAC. The war for dominance in the pet world is certainly on!

Market Reaction: WOOF closed at $29.40 on Thursday, up 63.33%. CEO Ron Coughlin noted the ticker symbol is not intended as a slight to cat owners. It could very well have been MEOW!

Company Snapshot 📈

WOOF $29.40 +11.40 (+63.33%)

Newsworthy 📰

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  • Steep Fall: Plug Power falls 7% after JPMorgan calls the company ‘fully-valued,’ issues price target below current level (PLUG -4.26%)

Later Today 🕒

  • 7.00 PM IST: Retail sales
  • Before Market Open: Citigroup Inc Earnings (C)
  • Before Market Open: Wells Fargo & Co. Inc (WFC)

Fun Fact of The Day 🌞

There are more than 350 different breeds of dogs worldwide

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