Do you know how to buy Cricut stock? They’re a company that’s known for their arts and crafts. And a Cricut IPO is coming soon they’ve announced. As a result, you’ll be able to invest in this company when they go public. Just remember to be careful of any new company that IPOs. You may want to let it find its directional footing before putting money into it.
What is Cricut?
Once in a while you’ll come across a new company or in this case, an upcoming Cricut IPO, and wonder why you haven’t heard of it. For many of us, Cricut is probably one of those companies.
In a nutshell, Cricut arts and crafts on steroids. Part 3D printing, part do it yourself wizard with a lot of creativity and technology mixed in. Cricut is currently one of the most powerful tools for artsy do-it-yourself designers with the opportunity to turn this into a legitimate online business.
Cricut provides its users with both the hardware and the proprietary software that work hand in hand to design and create almost anything they wish. Officially, the Cricut printers are called cutting plotters or die-cut machines. They do utilize tiny blades, rather than a traditional inkjet or lasers.
Users then upload design cartridges directly into the machine and choose which design they’d like directly from their smartphone. These printers are used alongside Cricut’s web-based software called Design Space. Therefore, Cricut does an excellent job of keeping all of these things in-house. Which can only help Cricut stock once it’s public.
Can I Buy Cricut Stock?
If you think Cricut stock is a business you want to invest in, well you’re in luck! Cricut just recently announced it is doing its first round of capital raising to prepare itself for an upcoming IPO for its debut on the public markets.
The Utah-based company is targeting an initial offering of 15.3 million shares at around $20-22 per share, which would raise roughly $322 million. This would place the early valuation of Cricut somewhere in the neighborhood of $4.7 billion.
Pretty good for a company that only has 3.7 million active users as of September 2020. Although Cricut does believe that their total addressable market of over 400 million global users according to its S-1 filing.
How Does Cricut Make Money?
Cricut actually has quite a few different potential revenue streams once you’re locked into its ecosystem. The hardware is quite literally a razor and blade model where users must use a Cricut branded printer in order to use its Design Space software.
The razor and blade analogy comes from the fact that the main tool that is used in the printer is the patented Cricut blade. Like any blade, these get dull over time, especially when cutting through various different materials. Cricut offers replacement blades in their online store that range in price from $12.99 to $79.99; depending on which machine you own.
There are also different types of blades for different types of crafting, so you can quickly begin to realize how much these accessories and add-ons can add up.
Cricut also has some SaaS characteristics as well. Which are always appealing to investors looking for those long-term recurring revenue streams. While the Design Space cloud-based software is free to use, it definitely comes with some limitations for high-volume Cricut users.
Is Cricut Publicly Traded?
If you’re looking for Cricut stock, you’re not in luck quite yet. But it’s coming! While they’re not a publicly traded stock yet, they’ve announced their intentions to go public. As a result, you’ll be able to add their stock to your portfolio.
Cricut Stock Subscriptions
Enter Cricut Access, which is the site’s premium subscription service that unlocks all of the fun things that Cricut offers. Here is a quick breakdown of the Cricut Access cost from the Cricut website:
As you can see, there’s a standard subscription; which is actually the premium version of Design Space. As well as a premium version (or an even more premium version of the standard subscription), which is already premium. Confusing?
Cricut also provides the ever so convenient option of getting the premium subscription of Design Space for the same cost as the standard subscription. But only in one yearly payment. With the added benefits being 20% off all materials and free shipping for orders over $50, Cricut doesn’t really give much of a choice to users for which the better subscription package is.
The numbers that Cricut is bringing in speak for themselves, as revenue surged by 88% year over year in 2020. Net income grew by 196% year over year. If Cricut can continue on this growth path, we could see a recurring revenue beast that’ll only continue to see its margins grow as the company matures. Which only helps Cricut stock.
Who Uses Cricut?
Anyone from people who use arts and crafts to relax to entrepreneurs who want to take their design skills and make an income from them. According to its S-1 filing, Cricut estimates that 96% of its uses are female and 29% of them sell their Cricut creations for income.
That’s nearly a third of its users. Users are being empowered by Cricut to start businesses related to things they make in their ecosystem.
What else does that mean? At least 29% of its users are extremely high volume users, premium subscribers, and often needing upgrades and accessories that can only be bought from the Cricut online store.
As the definition of the workplace continues to evolve after COVID-19, we can reasonably expect Cricut to gain even more users who choose to work from their homes. Which can only be a positive for Cricut stock.
What about the buyer side of Cricut? Social media has been the place to showcase and sell original Cricut designs. Sites like Etsy, Pinterest, Instagram, and YouTube, have all helped bring Cricut to the mainstream. And they’ll continue to provide outlets for DIY entrepreneurs around the world.
What Are the Risks With the Cricut IPO?
Every company in the world has risks. Especially ones making their debut on Wall Street being scrutinized and picked apart by analysts and investors alike. Does Cricut stock have risk? Absolutely. Here are some.
Competition: You knew there’d be competition because of how strictly Cricut keeps its hardware and software components within its own ecosystem. Truthfully, there are quite a few printers on the market that does what a Cricut printer does. It’s just that they won’t work the Design Space software. Companies like Silhouette have their own proprietary software and offer some direct competition to Cricut in the hardware space too. Not only that but there’s already been a history of third-party software developers creating programs to be used with the Cricut printers. They’ve taken legal action against many of these. But that’s frustrating and expensive.
COVID-19: Guess what? The pandemic may be coming to an end. Most of Cricut’s growth happened during 2020. Is this a happy coincidence? Or were there a bunch of bored people at home finding ways to make an extra buck? This is an issue that many so-called pandemic stocks like Peloton, TelaDoc, and Zoom are facing. Nobody really knows how much they’ll be used in a COVID-less future.
Customer Dissatisfaction: Recently, in order to capitalize on the upcoming IPO, Cricut committed a cardinal sin of a customer-based company. They tried to take away services by adding the subscription model. Existing customers went from unlimited uploads per month down to twenty, unless they signed up for the premium subscription. The backlash was so fierce that Cricut backpedaled and allowed unlimited usage until December 31, 2021. What happens after that date, is anyone’s guess. But a quick look across social media shows that a large portion of Cricut’s faithful users aren’t happy.
Is It Sustainable?
Not Cricut’s business model, the crafting and customization industry in general. Like many indoor activities during the pandemic, crafts may only be popular when we can’t leave our houses. Also, Cricut isn’t really offering anything that isn’t replicable by any other company.
We often talk of economic moats that a company may have, and Cricut’s seems to be fundamentally weak compared to other industries. So keep that in mind when considering an investment into Cricut stock.
Final Verdict on Cricut Stock
While Cricut stock definitely has an opportunity to create lasting hardware and software revenue streams for the future, the actual industry and its longevity seem a little more shaky. No doubt Cricut is timing their IPO with the immense popularity it’s built throughout the COVID-19 pandemic.
And like other recent Wall Street debuts like Roblox, Korean eCommerce platform Coupang, and DoorDash, these brands have been at the focal point of our necessity. Nobody is doubting how cool the technology is but in a world where 3D printing companies are using their technology to print aircraft parts or semiconductors for microchips, the long-term utility of Cricut seems somewhat trivial.
With all that being said, Cricut certainly has a first-mover quality to it on the stock market. And anytime you can be directly associated with hot stocks like Etsy or Pinterest, there is more likely to be interest from investors. Let’s file the Cricut IPO onto our watchlist for now, and see how the company is able to perform coming out of the pandemic.