BarkBox IPO: Stock to Hit Market in 2021 Via SPAC
A BarkBox IPO is officially coming to the market. The company recently announced BarkBox stock will trade on the NYSE next year. After the success of Chewy and recent filing from Petco, investors are showing interest in this opportunity.
But should you invest in BarkBox? Here’s what we know…
BarkBox IPO: The Business
Executive Chairman Matt Meeker, Henrik Werdelin and Carly Strife founded BarkBox (NYSE: BARK) in 2012. Headquartered in New York City, BarkBox is a subscription service for dogs. It provides toys, treats, home products and health services. BarkBox has 6.5 million customers, 1.1 million active subscriptions and 8.5 million followers on social media platforms. The company has five product lines and has 23,000 retail outlets carrying its products. They include Target, Petco and Costco.
BarkBox sees itself as a global industry leader and devoted to being the most dog-centric company possible. And now that a BarkBox IPO is coming, the company has an opportunity to expand even further. But first, let’s look at what the company has to offer.
Products and Offerings
BarkBox distributes its products via subscription, a popular model. And all its products are designed and made exclusively for the company. BarkBox also focuses on personalizing products and subscriptions for each consumer, claiming no two dogs are alike.
Here are BarkBox’s products, including 2020’s new additions:
- BarkBox (2012): a personalized monthly box with themed plush toys and treats
- Bark Super Chewer (2017): a personalized monthly box with themed durable toys
- Bark Home (2019): house essentials such as beds, collars/leashes and bowls
- Bark Bright (2020): dog dental solution and future health and wellness platform
- Bark Eats (2020): a personalized food blend service.
One way BarkBox advertises new products is by promoting to active subscribers with Add-to-Box. Add-to-Box allows consumers to add a product to their month’s box for a one-time purchase. This method alone will bring an estimated $6 million in revenue for the third quarter of fiscal year 2021 (ending March 31, 2021).
And that brings up the question: How are BarkBox’s finances?
BarkBox Stock: The Financial Data
BarkBox provided an investor presentation for the upcoming BarkBox IPO. It contains similar information to a prospectus, including historical financial data and future estimates.
In 2018, BarkBox recorded $148.8 million in revenue. That grew 28.7%, to $191.4 million in 2019. And for 2020, revenue increased 17.2%, to $224.3 million. The company estimates its total revenue for the 2021 fiscal year will be $369.2 million, for a growth of 64.6%. Its 2023 estimate is $706 million.
BarkBox recorded gross profit in each year represented in its presentation. Revenue grew 56%, from $83.7 million in 2018 to $107.1 million in 2019. In 2020, it increased 60.4%, to $135.4 million. BarkBox estimates gross profit will be $221.1 million in 2021. That’s a growth of 59.9%. The company’s 2023 estimate for gross profit is $413.1 million.
But despite having a gross profit, BarkBox doesn’t have net income. Instead, the startup has recorded net losses in recent years. In 2018, net loss totaled $21.1 million. And the company’s loss increased in 2019 to $37.1 million. But in 2020, BarkBox’s net loss decreased to $31.4 million, and net loss is expected to fall to $21 million for 2021. BarkBox gave a conservative estimate of $29.7 million in net losses for 2023.
BarkBox is looking to grow and expand, both in product and distribution. And that’s one reason the BarkBox IPO is happening now. But BarkBox stock isn’t coming the traditional way.
BarkBox and Northern Star: SPAC IPO
BarkBox is going public via SPAC, the biggest 2020 trend for IPOs. SPACs are special-purpose acquisition companies that go public and use the raised capital to acquire another company. This is how companies such as Virgin Galactic, DraftKings and Lordstown Motors went public. In this case, BarkBox is the acquired company and Northern Star Acquisition (NYSE: STIC) is the SPAC.
BarkBox’s Executive Chairman Matt Meeker commented on the BarkBox IPO:
We are thrilled to partner with Northern Star as we enter our next phase of growth. We started BARK because we are obsessed with making dogs and the people who love them happy. As a result of this merger, we will accelerate our ability to scale the BARK platform worldwide, add joy to the millions of dogs and families who love our products through our monthly subscription service and grow our omni-channel distribution. We are energized by the numerous growth opportunities ahead, which include expanding our product offerings and experiences, enhancing our robust customer engagement platform though the use of artificial intelligence and creating lasting memories for dog lovers.
BarkBox also recently hired CEO Manish Joneha, a former executive of Amazon and eBay. He brings a background of scaling businesses with consumer-centric products, technological innovation, omnichannel commerce and global expansion. As a result, Joneha will be CEO of the newly combined company. He added…
We believe that this transaction with Northern Star will provide BARK with a stronger platform to advance our mission, innovate, and find new and creative ways to connect with the growing BARK community. Upon closing of the merger, BARK will be a public company with a strong balance sheet and leading market position in a fast-growing, recession resistant market supported by comprehensive research and data, highly personalized products, and experiences designed to satisfy each distinct dog’s personality and preferences. More than one million dogs eagerly jump at the front door awaiting our products monthly and we will strive to make our public shareholders as happy as we make our dogs and their families.
Northern Star believes bringing BarkBox stock to market is the right move for the SPAC. Executive Chairwoman and CEO Joanna Coles commented:
BARK is a market-leading, consumer-focused, digital-first business that we believe is poised for long-term success. The Company’s loyal customer base, strong brand resonance and passionate social following create exciting opportunities to further solidify BARK as a leading global brand for dogs. I have spent my career building brands and getting audiences to take notice, care, engage and share, and I have never encountered a company with such tremendous reach and relationships with its customers. I believe BARK is a true disruptor in the space, with hard-to-replicate brand loyalty, proprietary products, robust economics and an attractive subscription and e-commerce business model that positions the Company to continue to thrive in the years to come.
So for investors interested in the BarkBox IPO, here are all the details.
BarkBox SPAC IPO Details
On December 17, BarkBox and Northern Star Acquisition announced a business merger that will value the company at $1.6 billion. BarkBox will receive up to $454 million in cash made up from Northern Star’s IPO and a fully committed private investment in public equity (PIPE). The PIPE is led by Fidelity Management with $200 million at $10 a share. All BarkBox shareholders and management are holding 100% of their equity. BarkBox IPO proceeds will help grow existing and new product lines, fund staffing and marketing, and reduce debt.
Both boards of directors approved the deal. The companies now need the approval of stockholders. If everything goes smoothly, investors should expect BarkBox stock in the second quarter of 2021. It will trade on the NYSE under the ticker symbol BARK.
If you’re looking for the latest investment opportunities, sign up for Investment U’s free e-letter below! You’ll get insightful tips and research from our experts delivered straight into your mailbox. Whether you’re a beginner or an experienced investor, there’s something at Investment U for everyone. And if you’re interested in IPO investing, check out our IPO Calendar to stay up-to-date on the latest offerings.
The BarkBox IPO is coming at the end of a blockbuster year for IPOs and SPACs. Additionally, 2020 increased demand for pet supplies as many quarantined families adopted new additions. That’s why now could be the perfect timing for BarkBox stock.