Chewy Looking to Post IPO

Chewy Inc said on Thursday it priced its initial public offering at $22 per share, above its target, and sold more stock than originally planned, valuing the online pet products retailer at $8.77 billion.

The IPO raises funds to help manage the debt load of parent company PetSmart, and indicates investor demand for a loss-making but fast-growing e-commerce company to tap into the roughly $70 billion U.S. pet industry market.

Chewy’s sales have rocketed from $26 million to $3.5 billion between 2012 and 2018. Its 2018 net loss narrowed to $267.9 million from $338.1 million in 2017.

Some 46.5 million Chewy shares were sold in the IPO, up from the anticipated 41.6 million as PetSmart sold more shares than originally planned.

At $22 per share, PetSmart will receive almost $900 million from the sale of its stock. Chewy raised $123.2 million, which the company has said will be used for working capital and other expenses.

Chewy had set a price range of $19 to $21 per share, which was raised earlier this week from $17 to $19 per share.

Chewy pitched its stock to investors as a way to buy into the trend of “pet humanization” by owners who are increasingly treating pets as a part of their families, as well as buying into an industry which has historically held up well in economic downturns.

PetSmart acquired Chewy in 2017, adding $2 billion to PetSmart’s debt load to do the deal. The IPO values Chewy at almost three times the $3.35 billion PetSmart paid for the company.

Chewy is expected to start trading Friday morning on the New York Stock Exchange under the ticker "CHWY."