Online pet product retailer Chewy which is owned by behemoth PetSmart that made its public debut this Friday witnessed smart uptick on opening day and soared by nearly 86 %. On its first trading day the share opened at $36 giving it market capitalization of $14.9 billion and closed the day at $34.99 per share which is 59 % higher than its IPO price. When it opened the 46 million shares of Chewy were priced at $22 per share which was a little over its indicative range of $19. The stock offered exceeded expectations by $5 million and helped raise $1 billion.
Chewy was founded in 2011 by Michael Day and Ryan Cohen which brands itself as largest pet-e-tailer within United States. It has set itself apart from other similar businesses in the market by excellent customer service which is accessible 24/7 and delivers all online orders within two days. This has helped it to establish loyal customer base that has grown at a rate of 60 % that contributed $3.5 billion in sales and helped to attract investors to its IPO. CEO Sumit Singh of Chewy stated that from online point of view the brand’s reach is just 10 % of the $70 billion pet food industry and the online industry has penetrated just 14 % of it.
Though on a high growth path the firm has faced several challenges like high shipping costs that have eaten into its profits and between 2017 and 2018 it reported net loss of $268 million. But its sales have been growing rapidly climbing from $26 million during 2012 to nearly $3.5 billion during 2018. After the IPO, parent PetSmart backed by BC Partners will own around 70 % of Chewy’s stock and will have 77 % voting power which it had acquired in 2017 for 3 billion.