Late last year, BarkBox announced that they would be going public in 2021 via an IPO on the NYSE. Recently, other companies in the pet supplies sector such as Petco and Chewy have found great success after their IPO. Heres what we know so far about the company’s forthcoming IPO, including info on BarkBox fundraising, and when the BarkBox IPO date will be.
TL;DR
- BarkBox is a member of the growing subscription box industry, with a simple twistits forspac your dog. They were early adopters of this business model, launching in December of 2011. Since then, theyve grown to a customer base of over 1 million pups served each month.
- Carly Strife, Matt Meeker, and Henrik Werdelin are the companys three founders. Meeker originally served as CEO, but was succeeded in 2020 by Manish Joneja, who remains at the helm today.
- The BarkBox IPO is occurring via a SPAC (special purpose acquisition companies). The firm that they will be merging with is Northern Star Acquisition Corp., in a deal valued at $1.6 billion.
- Each box is customizable to an individual dogs wants and needsor, what their human wants for them.
- The company has expanded their line of offerings to include Bark Bright, Bark Essentials, Bark Eats, and BarkBuddy.
- You can learn more about IPOs here.
A quick rundown of the BarkBox company history
Bark was founded in 2011 by Carly Strife, Matt Meeker, and Henrik Werdelin, and is currently headquartered in New York City. Theyve operated as a private company since their founding, and until last year were led by Co-Founder Meeker in his role as CEO.
Manish Joneja is the companys new CEO, and will be leading the company into their IPO. Joneja previously worked his way up to an executive role at Amazon before transitioning into the pet sector.
BarkBox has also expanded into traditional retail stores like Target. This means consumers can make one-time purchases of various BarkBox productsand the company avoids alienating buyers who aren’t ready for a full subscription.
BarkBox fundraising
Barkbox is currently funded by 17 different investors. August Capital, RRE Ventures, and Resolute Ventures are the lead investors, and August Capital partner Tripp Jones also sits on BarkBoxs board of directors.
By the numbers, the dog-loving companys fundraising has grown steadily since its founding:
- $1.3 million in 2012
- $11 million in 2014
- $16 million in 2020
The steady increase in funding has also led to a steady increase in the companys valuation over the years, and it currently sits at a $1.6 billion valuation heading into its IPO.
Path to the BarkBox IPO
BarkBox has chosen a non-traditional route to take their company public, via a SPAC merger. A relatively new way to go to market, a SPAC merger occurs when an existing company (in this case, BarkBox) is acquired by a blank-check firm (Northern Star Acquisition Corp.), after the blank-check firm has acquired capital through the IPO process.
The concept of a SPAC merger originated in the 1990s, but maintained a relatively low share of IPOs, only being used in around three percent of all IPOs. At the time, SPACs were considered a lower echelon of sorts.
In fact, that statistic held its post until 2019. That’s when the popularity of SPACs skyrocketed, making the process the IPO technique of choice for almost 30 percent of all new market offerings that year. So, why the sudden change?
There are many reasons to choose a SPAC as the route of choice for going to market, but a few of them stand out head and shoulders above the rest. The most prominent reason is that a SPAC offers access to more capital than a traditional IPO does.
When merging with a SPAC, the existing company has the opportunity to retain a larger stake in their business while also gaining access to a larger pool of capital than they would previously have been able to.
The other largest advantage is that a SPAC merger eliminates somebut certainly not allof the risk associated with going public during a period of volatility in the market. When pursuing a traditional IPO, the company being listed exposes itself to a variety of risks associated with market conditions, even though those conditions have little to nothing to do with the new stock itself.
For example, Company X may decide that their IPO date will be May 15.
On May 14, unpredictable to anybody and completely unrelated to Company X, the market takes a sharp turn for the worst.
The next day, Company Xs stock goes public with the opening bell, and immediately loses value because of the poor market conditions.
If going public via a SPAC merger, Company X would have been able to negotiate the price of their overall shares with the blank-check company itself, essentially giving them the ability to lock in a price, which in turn helps to protect it from volatile markets.
Note: SPACs debut at $10 per share, but the number of shares in an offering can change. The more shares that are available, the more the company earns in the funding process.
Examples of SPACs in early 2021 include EV bus manufacturer ProTerra and Jay-Z’s cannabis company, aptly titled The Parent Company.
Related: What is a SPAC?
Its important to note that while pursuing a SPAC merger certainly offers advantages that a traditional IPO may not, it doesnt act as a back-door of any kind. All the same filings, forms, and general paperwork that are required to be reviewed by the SEC before a traditional IPO are also required when a company uses a SPAC. The same rules, scrutiny, and deadlines apply regardless of what process the company uses to get to market.
Heading into the Biden administration, public companies will likely have even more to reportnamely environmental and equitability metrics for greater corporate transparency. BarkBox and other newly public companies may even be at an advantage since they won’t know much different.
When is the BarkBox IPO date?
BarkBoxs IPO date is coming soon. While an exact date is not yet public knowledge, the IPO is expected to be in late Q1 or early Q2 of 2021.
It has been made public that BarkBox will be listed on the New York Stock Exchange (NYSE) when it goes public. It will trade under the ticker symbol BARK. What better ticker symbol could they get?
What investors should know
BarkBox was early to enter the subscription box business model, and as such, has had ample time to work towards perfecting their business processes. This is important considering the rapid rate of growth for the subscription industry in recent years.
“While S&P 500 sales in Q1 2020 contracted at a -1.9% annual rate, subscription-based revenue continued to thrive, growing at 9.5% in the same quarter.” – Carl Gold, Chief Data Scientist for Zuora
The decision to go public makes more sense when you lift the hood up on BarkBoxs financial wellbeing.
In 2020, the company had a revenue of $224.3 million, a 17.2 percent increase from 2019. Its revenue projections for 2021 come in at just over $369 million, expecting a growth of 64.6 percent this year.
BarkBoxs gross profit has also grown year-over-year, rising from $83.7 million in 2018 all the way to $135.4 million in 2020. Sounds great, right? Maybe.
The catch here (theres always a catch) is that despite increases in revenue and pulling in a substantial gross profit, BarkBox still doesnt have any net income. And when you dont have net income, youre left with one thingnet losses. Simply put, this happens when a companys expenses exceed its profits. The solution? Theres a few viable ones, but for BarkBox, the answer is to go public.
Bottom line
2020 has been the year of the SPAC. Other companies that have taken this route as of late include DraftKings, Repay Holdings, and Virgin Galactic. So while the method may have only gained in popularity recently, there isnt too much to fear as its a time-tested and well-respected way to go to market.
In regards to BarkBoxs financial well being, we should expect to see decreases in operating losses trend downwards over the next years, particularly after their IPO. With the influx of capital, Meeker says that BarkBox will focus on expanding internationally, offering their services to dog lovers across the globe. Expect BarkBox to look into expanding their service lines to include other pets as well, particularly cats and fish, who together make up roughly 35% of the worlds pets.
BarkBox has a unique opportunity to expand their market share as the leader in pet-focused subscription boxes. With the addition of seasoned Amazon veteran Manish Joneja as CEO, the company will likely also begin to shift their focus to their other offerings aside from the traditional subscription box. By diversifying their product lines, BarkBox looks to expand their hold on their niche market into other spaces, increasing their revenue streams and hoping to turn net losses into net profits in the upcoming years.