Petco Health and Wellness Co. and Poshmark Inc. sign outside of the Nasdaq MarketSite during their initial public offering (IPO) in New York, United States on Thursday, January 14, 2021.
Michael Nagle | Bloomberg | Getty Images
Shares of Petco Health and Wellness Company climbed more than 60% when they debuted on the Nasdaq on Thursday, reflecting Wall Street’s appetite to invest in the industry during the pandemic-fueled pet boom.
Petco opened at $ 26, about 44% above its IPO price, but shares were recently trading close to $ 30.
As of Wednesday evening, the company had valued its initial public offering at $ 18 to raise around $ 816.5 million, more than the expected price target of $ 14-17. It trades under the symbol WOOF. Petco is owned by the Canada Pension Plan Investment Board and private equity firm CVC Capital Partners.
The San Diego-based pet supply retailer was founded in 1965. It went public in 1994, but went private when ownership changed hands. It has approximately 1,470 stores in the United States and Puerto Rico, including more than 100 in-store veterinary hospitals.
Petco’s customer base has grown during the pandemic as more Americans adopt new dogs and cats or catch other creatures, such as lizards and hamsters. The demand for pet supplies and accessories has also increased over the years, with owners treating their pets as part of the family. This prompted them to spend more on toys and accessories and switch to fresh, organic or fresh foods.
As families adopt and welcome new pets, they purchase supplies ranging from dog beds and crates to leashes. Families who had dogs, cats, fish, or other creatures also tend to spend more as they buy toys or treats to keep their pets entertained.
Yet it also faces stiffer competition. Shares of online rival Chewy have risen more than 250% in the past year. The company offers a subscription model that automatically replenishes pet owners, such as dog food or cat litter. Barkbox, a provider of dog treat subscription boxes, said last month it would go public through a merger with a PSPC.
In an interview with TBEN’s “Squawk on the Street”, CEO Ron Coughlin said the company has competitive advantages over its rivals. He said he’s adding veterinary services to more of his stores, which tends to entice pet owners to purchase supplies and food while they’re there. He said he can use his stores to fulfill orders online. And he said his same-day deliveries can beat his competition in terms of speed and price.
Correction: Petco’s shares trade on the Nasdaq stock exchange. A previous version of this story twisted the exchange.