Petco Stock IPO 2021?
Is there a Petco stock IPO in 2021? What’s their stock price? When it comes to our pets, that’s a business that’ll never go out of style. Therefore, it’d be a good investment. The pet business is a billion dollar industry. Good people love to spoil their pets. We spend hundreds of thousands of dollars on them at stores like Petco. So when is their stock coming?
What Is Petco?
- Even if you don’t have a pet, you’ve no doubt seen one of their 1500 locations that are scattered across the United States and Mexico. Petco was founded in San Diego, California 55 years ago in 1965. It remains one of the largest pet supply chains in the world. In 2018, Petco expanded into Canada via the Canadian Tire brand chain. They have over 500 stores in the Great White North. Petco even has a brand called Unleashed by Petco which has 85 locations of its own and specializes in spas and grooming; as well as an online shopping pickup destination for Petco.com.
The Petco Back Story
Petco started out as a mail-order veterinary supply store but eventually evolved into the consumer-based brand we know today. Petco is a huge supporter of pet adoption rather than selling. So they only hold fish, small reptiles, and small rodents for sale.
They don’t engage in the selling of cats or dogs. Back in 2005, Petco made a deal with PETA to end their sale of large birds as well. Petco operates under their company slogan which is “Think Adoption First”.
As a result, they’ve played a huge role in helping to reduce the selling of pets in pet stores and the operation of puppy mills across America. You may even recognize the brand as the name of the San Diego Padres’ baseball stadium: Petco Park.
Why You Should Care About a Petco Stock Price
Earlier this year, Petco announced that it was set to IPO on the NASDAQ exchange at some point in early 2021.You can find the Petco stock price under the ticker symbol $WOOF.
The IPO marks a return to the public exchange for Petco, who went private in the mid 90s. Then came close to another IPO back in 2015 before a private equity firm purchased the company.
Now, with the COVID-19 pandemic causing many of us to work from home, our four-legged friends have secretly been the biggest beneficiaries of the current quarantine.
Pet adoption has gone through the roof in 2020. And many shelters around America are having trouble keeping up with the demand. It’s estimated that pet ownership in the United States will grow by 4% in 2020.
And while this doesn’t seem like a substantial figure, that’s 4% of households that will need pet food, toys, grooming, and training that didn’t before.
What does that amount to? Petco believes it’ll create a total of $4 billion of additional pet supply spending in America alone.
It’s not as common to see older companies make their debuts on Wall Street. But Petco’s newest offering comes with a well-known and trusted brand as well as an established network of infrastructure across North America.
Petco is seeking a $6 billion valuation for its IPO. And is fresh off reporting a year-over-year rise in sales of nearly 10% over the first three quarters of 2020. It could be good for a Petco stock price.
There Are a Lot of Dogs in This Petco Stock Fight
The thing about Petco is that it’s not unique and is actually entering into quite a crowded market. Petco may have 1500 brick and mortar locations, but so what?
Not a lot of people are heading out to shop right now. And there are several well known options that people can already use to get their pet supplies online.
This remains the fundamental problem with a Petco stock IPO. Are many investors going to care? The landscape shows that tech companies are debuting and capturing massive growth in their stock price.
What chance does an old company like Petco have in attracting young investors? Here are a few companies that are already established in the pet supply sector.
What Is the Symbol for Petco Stock?
- Petco stock is live! You can invest in it today. As a result, the stock symbol is $WOOF. Petco has the ability to be a great investment. Pet supplies will never be out of style. But there are many different ones to choose from these days. It’s not like it was when Petco first began. But they have lasted in spite of the online competition.
Chewy is the eCommerce leader in the pet supply industry. They’re currently owned by one of Petco’s main rivals in PetSmart. In 2019, Chewy reported total revenues of $4.85 billion.
A number that should only rise in 2020 due to the COVID-19 pandemic. Chewy has several giant distribution centers around the United States. They also offer a service called Chewy Pharmacy.
Which is an online pharmacy for pet prescriptions. Chewy’s stock debuted in June of 2019 at $22 per share. At the end of the most recent trading session, the stock had nearly quadrupled to its current price level of $74.94 per share.
The owner of Chewy also owns PetSmart. They’re currently the leader in North American pet retail stores with over 1600 in the United States and Canada.
Although PetSmart isn’t currently a publicly traded company, it certainly has an eCommerce presence due to its ownership of Chewy.com. As well as its own website, PetSmart.com.
PetSmart doesn’t directly sell animals. But they do host various local shelters at their stores for adoption days where people can rescue animals in need of a home. They also offer services such as grooming, PetHotel, and Doggie Day Camp.
Amazon Stock Review (NASDAQ:AMZN)
It seems like Amazon is a rival for nearly every company. And pet supplies are of course no different. Amazon is probably more of a direct rival to Chewy given the eCommerce nature of the two platforms.
The ease and convenience of being an Amazon Prime member and receiving your purchase the next day or even sometimes on the same day, is difficult to beat.
Online sales of pet supplies is believed to make up about 24% of the total pet supplies sales this year. It’s only expected to grow in the future.
Not exactly an online pet supply retailer, but it sure is worth mentioning as an up and coming company that sells pet insurance. The emergence of Trupanion and other companies like Lemonade (NYSE:LMND) that offer pet insurance to owners is a sure-sign that pet ownership is officially a booming industry.
With the increase in pet ownership and adoption around the country, expect companies like Trupanion to continue to reap the benefits.
Can Petco Stock Compete?
- As of right now it’s tough to say for sure. Petco is first and foremost a brick and mortar retailer. One that relies on its large number of stores and brand recognition to attract customers. The COVID-19 pandemic has proven to be a catalyst that has jump-started the pet supply industry. But much of this has benefited the eCommerce side of things. Once the pandemic is over, can we rely on people to go back to their old ways of shopping in-store rather than sticking with the convenience of online shopping?
PetSmart has more stores than Petco and already has an established brand in Canada as well. What does Petco have that will attract customers back to its stores?
Petco has an eCommerce presence but in the long-run can it compete with Amazon or Chewy? These are the questions investors will be asking when they think about investing in Petco and buying Petco stock.
Another issue that Petco has is that it still has over $3 billion in debt on its balance sheet. Something that generally turns investors away from a stock. It’s highly leveraged and owns a 5.5 times debt to equity number that could be the deciding factor for some investors.
Look, we all love our pets. And these days we definitely treat them more as humans than animals in our homes. Petco is capitalizing on the recent spike in pet ownership and the incoming tidal wave of pet supply sales that will accompany this boom.
For a pet supply retailer, there may be no better time than now to debut on Wall Street. High sales numbers and the explosion in pet ownership should attract investors enough in the short-term.
Final Verdict on Petco Stock Price
The long-term horizon could be a different story for Petco. As much of the retail sector shifts its focus to eCommerce platforms, stores with large brick and mortar infrastructure like Petco, matter less and less.
Just this year, another rival in the pet supply market, Pet Valu, closed all 358 locations as the COVID-19 pandemic forced them out of business. The reality is, if you don’t have a strong online presence in the retail space, it’s going to be difficult to survive; pandemic or no pandemic.
When turning to eCommerce, Petco has to face off with both Chewy and Amazon. Two online behemoths that will be near impossible to topple. With an expected continuous rise in pet supplies being bought online, Petco needs to step up its eCommerce game to compete with the likes of these companies.
Especially if it wants to continue to be one of the ladders in the pet supply industry. Added services like grooming, pharmacy and veterinary services, and dog training definitely help.
But more importantly Petco’s repeat subscription delivery service is a huge step in the right direction if it wants to compete with Chewy or Amazon. Growth investors may want to look elsewhere as Petco should be a steady stock. But maybe not one that we can expect to provide exponential returns anytime soon. If you’re looking for another stock that may IPO in the near future, check out IKEA stock!