Chewy Raises $1B In Upsized IPO

PetSmart’s Chewy prices its IPO at $22 a share, higher than its target

Between 2012 and 2018, Chewy's sales increased from $26 million to $3.5 billion. It reported a net loss of $268 million in 2018, following a $338 million loss a year earlier. Chewy raised $123.2 million, which the company has said will be used for working capital and other expenses.

On Thursday, Chewy sold 46.5 million shares above its $19 to $21 target range, after earlier marketing only 41.6 million shares for $17 to $19 each. The shares closed up 59% to $34.99, giving the company a market value of about $13.95 billion. The company was valued at more than $15 billion following the stock sale.

PetSmart and its private equity owners, a group led by BC Partners, moved a portion of the Chewy unit to an unrestricted subsidiary and another to the parent company, both out of creditors' reach.

PetSmart acquired Chewy in 2017, paying about $3 billion for the company. The IPO valued the company at $8.8 billion, which is roughly double the $4.45 billion valuation that PetSmart reportedly set a year ago in private communications with investors. Chewy prides itself on being there for pet darlings and making encounters for them, as indicated by Cohen who helped to establish Chewy with Michael Day in 2011.

Chewy holds a 45% share of the online dog and cat food market, matching Amazon's share, according to research firm 1010data.


"There's still lots of penetration and growth to be had just within the US market, there's continuing to expand internationally", Cohen said earlier this week.

Jay Ritter, an IPO expert and professor at the University of Florida, however, is sceptical whether Chewy's valuation allows enough further upside potential for investors.

Shares of Chewy are expected to start trading on the New York Stock Exchange on Friday under the symbol "CHWY".

"If (Chewy) can clear legal and registration hurdles, they'll have no trouble competing out there", said Phillip Cooper, an independent consultant who advises pet industry investors.

While excitement was present in Friday's trading, Chewy still faces some hurdles.

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