a.k.a. Brands Holding (AKA) has revealed the terms for its IPO. The company plans to raise about $250 million in the offering. Is AKA IPO stock a good buy for investors? What can investors expect after the IPO?
Founded in 2018, a.k.a. Brands owns a portfolio of Millennial and Gen Z online fashion brands.
a.k.a Brands Holding's IPO date and price
The a.k.a. Brands IPO date isn't final yet but it's expected to be on Sept. 22. The company plans to offer 13.9 million shares at $17–$19 each. BofA Securities, Credit Suisse, and Jefferies are the joint lead book-running managers. The underwriters have the option to purchase an additional 2.1 million shares at the IPO price. a.k.a. Brands stock will trade under the ticker symbol “AKA” on the NYSE.
a.k.a Brands is profitable
a.k.a. Brands reported a net income of $14.8 million in 2020 compared to $1.4 million in 2019. In the first six months of 2021, the company's net income of $4.0 million rose 81 percent YoY from a net income of $2.2 million. Its revenue rose 111 percent YoY to $215.9 million in 2020 and 167 percent YoY to $218.0 million in the first six months of 2021. As of June 30, 2021, the company had $277.8 million in total liabilities and $34.3 million in cash and cash equivalents.
a.k.a Brands stock is a good investment.
a.k.a. Brands acquires consumer apparel brands and focuses on a direct-to-consumer business model. In March, a.k.a. Brands purchased Culture Kings, an Australian streetwear company, to add to its portfolio of brands. Its portfolio already included Princess Polly, Petal & Pup, and Rebdolls. a.k.a. Brands offers a suite of third-party resources to assist each brand in developing its own unique website and online store while helping with logistics.
In 2020, the number of orders grew by 53 percent with the average order size increased by 14 percent compared to 2019. Also, a.k.a. Brands got over 190 million site views in 2020, with more than 70 percent on mobile, gained more than 6 million social media followers, and serviced more than 2.2 million active consumers.
AKA stock’s forecast
The outlook for a.k.a. Brands stock seems promising. a.k.a. Brands highlights that retail sales have rapidly moved online amid the COVID-19 pandemic. The traffic in malls and departmental stores dropped quickly. The global online apparel, footwear, and accessories market size, valued at an estimated $300 billion in 2019, is set to reach $546 billion in value by 2025, according to Euromonitor.
Should you buy a.k.a Brands IPO stock?
At the midpoint of the IPO's proposed price range, a.k.a. Brands is expected to have a $2.3 billion fully diluted market value. a.k.a. Brands generated revenues of $352 million in the 12 months ended June 30. Based on its pro forma market cap, a.k.a. Brands' trailing price-to-sales multiple is 6.5x.
In comparison, Nordstrom and Target have NTM EV-to-sales multiples of 0.6x and 1.2x, respectively. Investors should note that a.k.a. Brands is a high-growth business with significant revenue growth expected in the coming years. Despite the fact that the IPO isn't cheap, I think that AKA stock has the potential to climb higher.
How to buy a.k.a Brands stock
You can purchase a.k.a. Brands stock through a traditional brokerage or an online discount broker like Robinhood.