PETCO Stock

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With the pandemic, I see a huge uptick in pet ownership. In our neighborhood pet ownership almost doubled. Same is the story from my kids classmates. Given this and without going deeper into the financials of the company, I feel like there’s going to be a significant demand for pet food, veterinary and grooming services in the next few years. Just based on this, I deployed some Vegas money. Feel like this is a Corona stock. It’ll be great to hear others thoughts.

 

[ProspectiveBum]

Purely anecdotal, but the 2 Petco locations in my area (one was a typical large Petco store, and the other was one of their smaller Unleashed storefronts) both closed in the last 24 months. This is in an upper-middle-class suburban neighborhood with tons of pet-owning families. I haven’t looked at the overall financials of the company at all, so maybe our area just underperformed.

I will agree that a huge number of people seem to have adopted pets during the pandemic. Good luck with your investment.

 

[Qs Laptop]

With the pandemic, I see a huge uptick in pet ownership. In our neighborhood pet ownership almost doubled. Same is the story from my kids classmates. Given this and without going deeper into the financials of the company, I feel like there’s going to be a significant demand for pet food, veterinary and grooming services in the next few years. Just based on this, I deployed some Vegas money. Feel like this is a Corona stock. It’ll be great to hear others thoughts.

I knew the IPO was coming up and had Petco (WOOF) on my watch list. I read the prospectus and found out they are severely in debt ($3.2B in debt and only $195M in cash?!!) and are going to use $300M of the $800M they raise to retire debt. That didn't sound good to me. Add in the fact they are competing with Amazon, Walmart, and Chewy and I decided to pass on the stock.

So naturally, it's up 63% in the first day of trading. I figure millennial Robin-hooders driving up the price. (And I'll save them the trouble: "OK, Boomer!")

I guess there are a lot of people that read headlines and don't do due diligence, or maybe my style of analyzing balance sheets, income, and cash flow statements is old fashioned. Yes, there are a lot of pet owners. Yes, they spend money on their pets. Yes, there are millions of more pets out there because of COVID. But, Petco was a going concern before the IPO. They've lost money the past three fiscal years (ending Feb 1st) They were also showing a loss in the quarter ending Oct 31, 2020. So why the optimism?

If I were you, I'd take my gains and get out. I see this stock maybe getting into the high 30's in the next week or so and then declining into the mid-20's, with a dive after fiscal year results come out, probably in mid-April.

 

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I knew the IPO was coming up and had Petco (WOOF) on my watch list. I read the prospectus and found out they are severely in debt ($3.2B in debt and only $195M in cash?!!) and are going to use $300M of the $800M they raise to retire debt. That didn't sound good to me. Add in the fact they are competing with Amazon, Walmart, and Chewy and I decided to pass on the stock.

So naturally, it's up 63% in the first day of trading. I figure millennial Robin-hooders driving up the price. (And I'll save them the trouble: "OK, Boomer!")

I guess there are a lot of people that read headlines and don't do due diligence, or maybe my style of analyzing balance sheets, income, and cash flow statements is old fashioned. Yes, there are a lot of pet owners. Yes, they spend money on their pets. Yes, there are millions of more pets out there because of COVID. But, Petco was a going concern before the IPO. They've lost money the past three fiscal years (ending Feb 1st) They were also showing a loss in the quarter ending Oct 31, 2020. So why the optimism?

If I were you, I'd take my gains and get out. I see this stock maybe getting into the high 30's in the next week or so and then declining into the mid-20's, with a dive after fiscal year results come out, probably in mid-April.

Thank you for the insights on foundational financials. No gains so far but if I get anywhere between 15-20% on the hype, I will bail out. Thanks again.

 

[MrsHaloFIRE]

Once you deal with Chewy you will never petco again. Perhaps other shoppers agree with me

 

[jazz4cash]

OP, was it easy to buy on the IPO? Petco is one of the reasons I started the IPO Strategy thread. My plan was strictly to buy for the IPO pop and not hold any longer than necessary. I assumed this stock was a spin-off targeting pet health and wellness. Now I see it is being re-IPO’d after going private for awhile. I just think the market is thirsty for IPOs esp fin tech, tech, healthcare , etc. Vegas money sounds right.

 

[Bamaman]

I've never seen very many buyers in Petco locations when I visit.

We have a Rottweiler and 3 cats, and we've found Chewy will they deliver for free since we buy in bulk. They're the company really setting the pet food business on fire.

 

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Jazz4.... I did not buy at the IPO price. Most of us don’t have access to buying at the IPO price. They typically go to institutional investors.