Late Thursday, Chewy, the Broward-based online pet store that is the largest of its kind, announced it would begin trading its shares Friday on the New York Stock Exchange at a price of $22.
By 11:30 a.m. Friday, share prices had nearly doubled to more than $41. They closed the day up 56 percent to $34.99.
The good news for South Floridians: The “pop” means investors believe the business is here to last, even though it is not yet profitable, analysts say.
“It’s a strong indicator that the company will continue to grow and hire more employees,” said Matt Kennedy, senior initial public offering market strategist at Connecticut-based Renaissance Capital LLC, which monitors IPOs.
Chewy currently has 640 employees at its Dania Beach headquarters, and an additional 1,100 at its Hollywood-based customer service center.
It is not clear how many of those employees own Chewy stock; a Chewy representative said the company does not discuss employee stock options.
But according to Kennedy, while the IPO is unlikely to mint local millionaires overnight, there will be some ripple effect from the share-price jump in South Florida.
“Public companies pay their employees in stock options,” he said. “Even if the amount is not significant enough to appear in a shareholder table in a filing, this could be a big payday for many employees in [South Florida], even if it’s not the mufti-millionaire scenario like we see in venture-backed unicorns in Silicon Valley.”
Three Dania-based executives — CEO Sumit Singh, CFO Mario Marte, and General Counsel Susan Helfrick — have been offered rights to tens of thousands of Chewy shares as part of new pay packages signed in advance of the IPO, according to a government filing.
Founder and former CEO Ryan Cohen, who remains a South Florida resident, confirmed he is not an active shareholder.
The reason for the large stock pop is simple, Kennedy said: Investors these days are betting big on high-growth companies. And despite being in the red, Chewy grew 68 percent last year.
In 2017, Chewy was purchased by pet supplies giant PetSmart for more than $3 billion. The hope was that PetSmart and its largest shareholder, private equity group BC Partners, would have more cash to pay down PetSmart’s heavy debt load.
Kennedy noted the price action puts the companies on a more firm financial footing, and makes PetSmart’s plan to sell equity in Chewy much more viable — providing further clarity on jobs for Chewy employees on the ground.