The market for initial public offerings will be tested this week as a flurry of companies get ready to price their deals. It’s an eclectic group that includes online pet retailer Chewy (that’s right—online pet food is back), cybersecurity company CrowdStrike, and Fiverr, a quirky platform for freelance services. Also coming: Mohawk Group, which makes kitchen appliances and other consumer products.
Let’s take a closer look.
When you think about selling pet food via the internet, what leaps to mind is a certain sock puppet (I still have a T-shirt) and the debacle that was Pets.com. Launched in 2011, 10 years after the liquidation of ill-fated Pets.com, Chewy is a new(ish) online pet food seller, for a new internet generation. Based in Dania Beach, Fla. (just outside Fort Lauderdale), Chewy (ticker: CHWY) says its “mission is to be the most trusted and convenient online destination for pet parents everywhere.” (Yeesh, “pet parents,” really?)
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Chewy is offering 41.6 million shares, but only 5.6 million from the company; the rest are from Chewy’s parent, pet retailer PetSmart, which will maintain 77% voting control of Chewy’s stock after the deal closes. Chewy expects to price the deal from $17 to $19 a share; there will be 395.7 million shares outstanding when the offering closes, which values the company at $7.1 billion at the midpoint of the expected price range. Privately held PetSmart was acquired by BC Partners for $8.7 billion in 2014; PetSmart bought Chewy in 2017 for $3.35 billion. Chewy is growing fast but losing gobs of money; the company posted 2018 revenue of $3.5 billion, up 68% from 2017, while losing $267.9 million. Morgan Stanley, JPMorgan Chase, and Allen & Co. are leading the deal.
Sunnyvale, Calif.-based CrowdStrike (CRWD) says it has “the first cloud-native endpoint protection platform built to stop breaches.” The company expects to sell 18 million shares this week priced from $28 to $30 a share, in an offering led by Goldman Sachs, JPMorgan, Bank of America Merrill Lynch, and Barclays. After completion of the deal, CrowdStrike will have just under 200 million shares outstanding, which would give the company a valuation of a little under $6 billion. For the January 2019 fiscal year, the company reports revenue of $249.8 million, up about 110% from the previous year, with a loss of $140.1 million. For the April quarter, the company estimates it had revenue of $95.7 million to $93.6 million, and a loss from operations in the range from $25.7 million to $26.5 million. The company’s largest investors include Warburg Pincus, Accel, and CapitalG; the company is led by founder George Kurtz, a former chief technology officer at McAfee.
Based in Tel Aviv, Fiverr (FVRR) is an online marketplace for freelancers in almost every field. The company’s name refers to the earliest incarnation of the company—people who would do or more less anything you can think of for five bucks. But what once was a jokey site has become a serious business. Fiverr plans to offer 5,263,158 ordinary shares priced between $18 and $20 each in a deal led by JPMorgan and Citigroup. After the offering, there will be just shy of 31 million shares outstanding, giving Fiverr a valuation of just under $600 million. The company describes what it does as a “service as a product” model. Fiverr says that since inception, it has completed “over 50 million transactions between over 5.5 million buyers and more than 830,000 sellers on our platform.” In 2018, Fiverr had revenue of $75.5 million, with a loss of $36.1 million. Attention Barron’s editors: I just found a guy on Fiverr offering to write “7 high-quality, original business and finance articles” for $120. Just sayin’.
Mohawk Group Holdings
Mohawk Group Holdings (MWK) plans an IPO of 3,333,333 shares priced from $14 to $16 each, in an offering from Roth Capital Partners and A.G.P. Mohawk will have 17.3 million shares out on completion of the offering, giving the company a market cap of about $260 million. The company, which makes a range of consumer products, asserts that “Mohawk was founded on the premise that if a company selling consumer packaged goods was founded today, it would apply artificial intelligence and machine learning, the synthesis of massive quantities of data and the use of social proof to validate high caliber product offerings as opposed to overreliance on brand value and other traditional marketing tactics.” Which of course makes total sense for a company that makes ice makers, hair straighteners, and kitchenware. In 2018, Mohawk had revenue of $73.3 million and a loss of $31.8 million. In the March quarter, Mohawk had revenue of $17.8 million and lost $8.4 million.
Write to Eric J. Savitz at email@example.com