Chewy Get Us Out Of Here?
Continuing from Twenty Years Later?....
The Chewy.com (CHWY) IPO soared from $21 to $41.89 in early trading Friday, then fell back to close at $34.99. The company raised over $1.8B in the IPO and is now valued at more than $16B.
48M shares were sold and post IPO, PetSmart remains the majority owner with a 70% stake in the company and 77% controlling interest. Unlike Pets.com, at least Chewy has a substantial brick and mortar or existing distribution chain presence. Consider their sales growth...
And Q1 2019 came in at $4.5B annualized. Most impressive? Yet, Chewy has NEVER made a profit. Say what? They don't make anything, utilize an existing brick and mortar distribution chain, have $3.5B in net sales and can't make a profit?
Chewy has posted a (30M) loss in Q1 2019; (268M) 2018, (338M) 2017, (108M) 2016, (32M) 2015; (32M) 2014; and is on track for a running four year loss of +800M. But that's only half the story...
It would seem that PetSmart with an 8X leveraged debt to earnings load (risk of bankruptcy and needs the cash?), took the opportunity to "cash out" with yield hungry investors footing the bill? When will the ubiquitous "they" learn?
Wag, Uber, Lyft, Pinterest, SurveyMonkey, WeWork, Wayfair, Fiverr, Crowdstrike, Slack, Zoom, PagerDuty, Chewy... YTD there have been 65 IPO's raising $26B with 60% of those still trading above their offer price. Do "they" ever learn?
In the year 2000, the span between February 11th (Pets.com IPO) and March 24th (market peak) was 43 days or 1 month and 13 days; the September 11th (triple top) was 214 days or 7 months and 1 day later.
Now invert that order.... In the year 2018, the span between the NDX market top on October 1st at 7728 and the triple top on April 25th at 7879 was 207 days or 6 months and 25 days; Chewy went public June 14th, 51 days or 1 month and 21 days later. Eerily, this temporal inversion of similar events nets about a 7 to 8 day time span differential in both cases.
Not unrelated, below a weekly showing that since 09/2018 RUT futures are in a bear market (more on that next week), and of late since 05/20 are tipping their hat.
Assuming we have not already rolled over the peak, and according to this time line, if the market were to peak again, it would do so between (41 days) July 26th and (53 days) August 4th. That is, if history repeats itself, if not, then...
Sherman, please set the Wabac machine to February 11, 2000, and away we go... Backing a really well thought out business plan and superbly intelligent business model.... Amazon.com purchased a majority 54% stake in the company... Pets.com went from initial operation in August 1998; to IPO on February 11th, 2000; to liquidation on November 7th, a scant 268 days later...Sherman please set the Wabac machine to present day, Friday June 14th, 2019; and away we go....
The Chewy.com (CHWY) IPO soared from $21 to $41.89 in early trading Friday, then fell back to close at $34.99. The company raised over $1.8B in the IPO and is now valued at more than $16B.
48M shares were sold and post IPO, PetSmart remains the majority owner with a 70% stake in the company and 77% controlling interest. Unlike Pets.com, at least Chewy has a substantial brick and mortar or existing distribution chain presence. Consider their sales growth...
Chewy has posted a (30M) loss in Q1 2019; (268M) 2018, (338M) 2017, (108M) 2016, (32M) 2015; (32M) 2014; and is on track for a running four year loss of +800M. But that's only half the story...
We have a history of losses and have accumulated $1.6B in stockholders’ deficit since our inception through February 3, 2019. - Chewy S-1Perhaps this is why in the $1.8B IPO, Chewy raised about $250M, while controlling shareholder PetSmart raised $1.6B? Say what? In 2017 PetSmart purchased Chewy for $3.4B, adding $2B to its debt load. Say what? PetSmart purchased a going concern with a $1.6B deficit, which has never turned a profit?
It would seem that PetSmart with an 8X leveraged debt to earnings load (risk of bankruptcy and needs the cash?), took the opportunity to "cash out" with yield hungry investors footing the bill? When will the ubiquitous "they" learn?
Wag, Uber, Lyft, Pinterest, SurveyMonkey, WeWork, Wayfair, Fiverr, Crowdstrike, Slack, Zoom, PagerDuty, Chewy... YTD there have been 65 IPO's raising $26B with 60% of those still trading above their offer price. Do "they" ever learn?
The Nasdaq peaked at 4884 on March 24th, 2000.... it was all downhill till October 8th, 2002 bottoming at 797. Only 929 days or 2 years, 6 months, 15 days, or 30 months, 15 days later, after 83.6% of investor's supposed "value" had been vaporized? - Twenty Years Later?Far above the excess of the dot com bubble, last October, 83% of US IPO's were NOT profitable business concerns. Is any of this starting to sound vaguely familiar? Once again, this old adage comes to mind...
if your looking at timeliness of news to get an edge, your probably wasting your time. Actually, porn has higher correlation with markets then news feeds. All kidding aside, Mr. Market is always f*cking someone in someway, so just figure out the who and/or how and go pile on.Now pay attention as we connect the dots with Pets.com in 2000, and their modern day counterpart Chewy.com, a scant twenty years later...
In the year 2000, the span between February 11th (Pets.com IPO) and March 24th (market peak) was 43 days or 1 month and 13 days; the September 11th (triple top) was 214 days or 7 months and 1 day later.
Now invert that order.... In the year 2018, the span between the NDX market top on October 1st at 7728 and the triple top on April 25th at 7879 was 207 days or 6 months and 25 days; Chewy went public June 14th, 51 days or 1 month and 21 days later. Eerily, this temporal inversion of similar events nets about a 7 to 8 day time span differential in both cases.
Not unrelated, below a weekly showing that since 09/2018 RUT futures are in a bear market (more on that next week), and of late since 05/20 are tipping their hat.
Assuming we have not already rolled over the peak, and according to this time line, if the market were to peak again, it would do so between (41 days) July 26th and (53 days) August 4th. That is, if history repeats itself, if not, then...
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