PetSmart's Chewy soars 59% in IPO

By Sarah Min

/ MoneyWatch

PetSmart's online pet retailer, Chewy, debuted on the stock market Friday in an initial public offering that saw its share price soar 59% to $35, making it the latest unprofitable tech company this year with an IPO price surge straight out of the gate. Chewy started trading with a head-turning market cap of more than $15 billion.

The Dania Beach, Florida-based company priced its initial public offering Thursday at $22 per share, which was above its expected price range and initially valued the pet goods company at $8.8 billion, according to its securities filings.

Shares started trading Friday in the New York Stock Exchange under the ticker symbol "CHWY."

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Founded in 2011, Chewy is the latest tech startup going public that hasn't ever been profitable. The company lost $267.9 million last year on revenue of $3.5 billion. It was bought in 2017 by PetSmart for nearly $3.4 billion.

It also has inherited a legacy of online pet retailers that went bankrupt after raising billions of dollars in the late-1990s dotcom bubble, including Pets.com. However, Chewy is counting on Americans' increased spending on pets, as well as the growing consumer migration online, to turn the tide. The company even noted in its filings that pet spending is resilient in an economic downturn due to the strength of the pet and pet "parent" relationship.

Americans spent $72.6 billion on their pets last year, which is more than triple the amount spent two decades ago, according to the American Pet Products Association. And while pet food buyers count for just 15% of all online buyers, they generate one-third of all e-commerce revenue, according to Rakuten Intelligence.

Chewy is also considering expanding overseas, as well as expanding in-house brands and pet pharmacy offerings.

— The Associated Press contributed to this story.

First published on June 14, 2019 / 12:36 PM

© 2019 CBS Interactive Inc.. All Rights Reserved.

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