Banking

‘Bro’ Coffee Chain Soars In Debut; Federer-Backed Shoe Maker On Tap

New IPO stock Dutch Bros (BROS), a drive-thru coffee chain, shot up in Wednesday’s debut. Running-shoe maker On Holding (ONON) is due to begin trading after both new issues priced above their expected range.




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Dutch Bros stock opened on the New York Stock Exchange at 32 a share.  BROS stock is currently up 48% to 33.95.

Dutch Bros on Tuesday priced its IPO at $23 per share, above an expected price range of $18-$20. The company offered 21,052,632 shares, raising more than $484 million. The IPO valued the company at around $3.8 billion. BofA Securities, J.P. Morgan Securities and Jefferies were lead book-running managers.

ON Holding will also trade on the NYSE. ONON stock has not yet opened for trading.

In tapping the public markets to broaden their appeal, both IPO stocks are taking on larger publicly traded rivals, after the coronavirus pandemic upended both of their industries.

Dutch Bros, which began as a double-head espresso machine in 1992, has since expanded into more than 470 shops, and other cold coffee beverages, across 11 states, largely in the western half of the U.S. The  chain — which calls its baristas “broistas” and offers a more casual alternative to a world of pretense-heavy cafes — also has a “secret menu,” similar to West-Coast burger chain In-N-Out.

Sales at Dutch Bros jumped 37% last year to $327.4 million. The company lost 38 cents per share over that time, but adjusted EBITDA swelled 43% to $69.76 million.

During the first half of this year, sales stood around $228 million, a 51% gain from the period a year ago. Dutch Bros’ per-share loss over that period was 32 cents per share. Adjusted EBITDA grew 29% to $45.83 million.

Those gains have come even as the coronavirus pandemic keeps people working from their homes. Dutch Bros also noted that wildfires last year in many western states kept people indoors.

IPO Stocks, Competition

Both IPO stocks are up against hefty competition.

Dutch Bros will debut as a number of larger publicly traded names — like Starbucks (SBUX), McDonald’s (MCD) and Dunkin’ — that compete intensely for daily commuters’ coffee.

On Holding, meanwhile, debuts after more people took up outdoor sports and other activities during the pandemic. But it will go up against the likes of Nike (NKE) and Adidas (ADDYY). On, which also sells apparel, also considers companies like Lululemon (LULU) to be competitors.

On Holding on Tuesday priced its IPO of 31.1 million shares at $24 apiece. That was above an expected range of $20-$22.

The Swiss running-shoe maker — whose investors include tennis icon Roger Federer — raised more than $746 million in the offering, with a valuation of around $6.5 billion.

Goldman Sachs, Morgan Stanley and JPMorgan are acting as joint lead book-running managers for the offering.

On Holding logged net sales of around $463 million last year, a 59% gain. For the first six months of this year, those sales jumped 85% to $343.4 million. On Holding lost money, on a per-share basis, but turned a per-share profit of one cent during the first half of this year.

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