Should You Buy Sweetgreen (SG) IPO Stock?

Tennis star Naomi Osaka–backed Sweetgreen (SG) is moving ahead with its IPO plans. The company has filed S-1 paperwork with the SEC to go public. What's the stock's forecast? Should you buy Sweetgreen IPO stock?

Founded in 2006, Sweetgreen is seen as a healthier and environmentally friendly option to fast food. The IPO comes after the COVID-19 pandemic fueled a surge in its digital sales. Several restaurant chains filed for an IPO in 2021, including Dutch Bros, First Watch, and Portillo's.

In the IPO, Sweetgreen plans to raise up to $100 million, a placeholder that will likely change. The IPO date hasn't been revealed but it could be in the coming weeks. The company filed confidentially for an IPO in June 2021.

Goldman Sachs, J.P. Morgan, Allen & Company, and Morgan Stanley are the joint book-runners for the IPO. The net proceeds from the IPO will be used for general corporate purposes.

Sweetgreen stock will trade under the ticker symbol “SG” on the NYSE. The pricing terms for its IPO aren’t known yet.

The Sweetgreen restaurant chain is popular among both busy office workers and investors. It offers a "plant-forward" menu featuring salads and bowls that changes depending on season and the restaurant’s location. Sweetgreen will benefit from a global rise in health consciousness in the coming years. In 2020, U.S. plant-based retail sales surged 27 percent to $7 billion, according to the Good Food Institute and the Plant-Based Foods Association.

Sweetgreen claims to be one of the fastest-growing restaurant chains in the U.S. in terms of revenue. The company operates 140 restaurants in 13 states. Sweetgreen plans to double its footprint over the next few years.

Sweetgreen, like its competitor Chipotle Mexican Grill, used technology to drive sales growth even before the pandemic made it necessary. Sweetgreen invested in its mobile app and redesigned its restaurant chain to make picking up online orders as easy as possible.

In the first nine months of 2021, Sweetgreen's revenue rose 52 percent year-over-year (YoY) to $243.4 million. The company’s revenue fell 19 percent YoY in 2020. Sweetgreen posted a net loss of $87 million in the first nine months of 2021, down YoY from $100.2 million. In Aug. 2021, the company disclosed a new investment in digital automation with its acquisition of Spyce, a producer of robotic kitchen technology.

It’s tough to comment on Sweetgreen's IPO stock because the pricing and valuation aren't known yet. In Jan. 2021, the company was valued at $1.8 billion in a funding round led by Durable Capital Partners. Sweetgreen's biggest investors include Fidelity Investments, T. Rowe Price, and D1 Capital.

When Sweetgreen's IPO is complete, retail investors will be able to buy shares through brokerages such as Robinhood.