A Solo Stove in a backyard
Source: Solo Stove Twitter

What Chubbies Owner Solo Brands' (DTC) IPO Valuation and Stock Forecast Tell Investors

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Oct. 29 2021, Published 11:06 a.m. ET

On Oct. 28, 2021, Solo Brands (DTC), owner of the popular Solo Stove and Chubbies Shorts, had a successful debut on the stock market. On its first day of trading on the NYSE, DTC stock rose as much as 38 percent. The company raised roughly $219 million in the offering. What’s Solo Brands’ forecast after the IPO, and should you buy the stock now?

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Several direct-to-consumer brands filed for an IPO in the second half of 2021, including a.k.a Brands, On, and All Birds.

The owner of Chubbies had a successful IPO debut

Solo Brands stock is rising and investors appear to be pleased with the company’s growth prospects. On Oct. 28, Solo Brands stock opened at $22.36—up 32 percent from its IPO price—but closed just 4 percent higher, at $17.61. The stock was up 2 percent in premarket trading on Oct. 29. A total of 12.9 million shares were offered in the IPO, at $17 each. Initially, Solo Brands planned to offer the shares at $14–$17.

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should you buy solo stove chubbies owner ipo
Source: Solo Stove Twitter

Solo Stove’s stock forecast

Founded in 2011, Solo Brands sells branded smokeless fire pits, camp stoves, and other outdoor gear. The IPO comes just a few weeks after the company revealed it had rebranded and acquired the Chubbies apparel brand, foldable kayak brand Oru Kayak, and paddleboard maker Isle. The direct-to-consumer company was formerly known as Solo Stove. Solo Brands sells its products through e-commerce channels.

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The global outdoor gear and apparel market, valued at an estimated $49.3 billion in 2021, is set to reach $75 billion in value by 2027, according to 360ResearchReports.

should you buy solo stove chubbies owner ipo
Source: Solo Stove Twitter
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Chubbies owner is a good investment

By acquiring three notable brands in 2021, Solo Brands significantly increased its net sales year-over-year in the first six months of this year. In the first half of 2021, Solo Stove generated $152 million in net sales, while Chubbies made $50 million, Isle made $12 million, and Oru made $11 million. In the third quarter, the consolidated net sales are expected to be between $66.8 million and $69.3 million.

In 2020, Solo Stove's, Chubbies', Isle's, and Oru's net sales amounted to $133 million, $44 million, $21 million, and $12 million, respectively. Unlike many other companies planning IPOs, Solo Brands is profitable. Solo Brands has a user base of over 2.3 million customers, with nearly 4.5 million social media followers. The company is backed by private equity company Summit Partners and Jan Brothers Holdings.

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Solo Brands IPO isn’t a good buy at this price

Solo Brands acquires and develops consumer products brands in the U.S. The concept of integrating many direct-to-consumer brands under an umbrella company is gaining traction in the e-commerce market. Solo Brands was valued at more than $2 billion in the IPO. Based on its pro forma market cap, Solo Brands’ 2020 price-to-sales multiple is 11.3x. To compare, Traeger and Weber have next-12-month price-to-sales multiples of 3.2x and 2.5x, respectively.

How to buy Solo Stove stock

If you’re interested in buying Solo Stove shares, you can do so through any stockbroker, including Robinhood.

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