Traeger Debuts on the NYSE—Is the IPO Price Too High?
Traeger released its IPO. The share prices started trading higher than expected. What can investors expect? Is the IPO priced too high?
July 29 2021, Published 3:50 p.m. ET
Riding high from stay-at-home barbeque enthusiasts licking their chops to refine their grill game, Traeger has released an IPO. Announced just after the holiday on July 4, Traeger filed confidentially with the SEC on May 3.
Traeger will trade on the NYSE under the ticker symbol “COOK.” The company raised $423.5 million and sold 23,529,411 shares in the IPO priced at $18 per share. The $18 price per share comes in at the top of the $16–$18 range that was expected. Investors keen on buying in on IPOs might want to take a closer look at COOK. At a price higher than expected, is COOK’s price too high or will buying now pay off?
Is Traeger profitable?
Traeger has undoubtedly capitalized on the fact that many Americans have eschewed restaurants during the COVID-19 pandemic and have committed to cooking at home more. From sourdough bread making to whipped coffee, one thing’s for sure, Americans are spending more time in their kitchens. Is this good news for Traeger? People bought all sorts of new kitchen gadgets, including grills.
In the first quarter of 2021, Traeger reported $39 million in net income on $236 million in sales. During the same three-month period in 2020, Traeger only made $8 million in net income on $114 million in sales. In the 12 months ended March 31, 2021—all during the COVID-19 pandemic—Traeger booked an incredible $668 million in sales, despite its products ranging from several hundreds of dollars to $2,000. In an interview with Yahoo Finance, the company said that it attributes the increase in sales to at-home cooking during the COVID-19 pandemic.
Traeger is a significant player in the wood pellet smoker and grill market. However, its proprietary “WiFIRE” technology sets it apart. Certain models enable users to sync their grill to their smartphones and control various aspects of cooking on an app. It also has Apple Watch integration to allow users to adjust temperatures or activate features remotely.
Will COOK gain value or sizzle out?
Shares of COOK opened above its IPO price of $18, starting at $22. COOK received a warm welcome from investors peaking at $23.74. The hares have pulled back slightly, but towards the end of its first trading day, COOK continues to sit above $22.
The future outlook on COOK rides heavily on consumer behavior. Will Americans’ dining habits revert to pre-pandemic ways of frequenting restaurants or will we see a hybrid of dining out and cooking at home? It’s impossible to predict just what the landscape will look like when the pandemic releases its grasp on consumer behavior. However, with new variants causing restrictions to be put back in place, Traeger might be poised to capture more of the home cooking sector.
Traeger was joined by another blockbuster IPO on July 29.
Popular investing platform Robinhood also released an IPO on July 29. Robinhood (HOOD) started trading at $38 per share, which values the company at $26.74 billion. The shares will trade on the Nasdaq under the ticker symbol "HOOD."
Investment activity has been high for both IPOs on July 29. Although separate industries, it seems like investors have made room for two high-profile IPOs.
