Shares of Petco Health and Wellness rose more than 60% in their debut on Thursday on the Nasdaq, reflecting Wall Street’s appetite for investing in the industry during the Covid pandemic-fueled pet boom.
Petco opened at $ 26, 44% higher than its IPO price, but the stock recently traded at nearly $ 30.
On Wednesday night, the company priced its initial public offering at $ 18 to raise about $ 816.5 million, higher than the expected price target of $ 14 to $ 17. It trades under the symbol WOOF.
The San Diego-based pet retailer was founded in 1965. It was introduced in 1994, but was taken privately when the owner changed hands. It has approximately 1,470 stores across the U.S. and Puerto Rico, including more than 100 veterinary hospitals.
Petco’s customer base grew during the pandemic as more Americans adopted new dogs and cats or acquired other insects, such as lizards and hamsters. The demand for pet supplies and accessories has also increased over the years as owners view their pets as a family. It inspired them to spend more on toys and accessories and upgrade to fresh or organic food.
As families adopt and care for new pets, they buy supplies from dog beds and crates to leashes. Families who had dogs, cats, fish or other creatures also tended to spend more as they bought toys or treats to entertain their pets and themselves.
Yet it also faces tougher competition. Online rival Chewy’s shares have risen more than 250% in the past year. The company has a subscriber-based model that automatically replenishes pet supplies for owners, such as dog food or cat litter. Barkbox, a provider of subscription boxes with dog treats, said last month that it would be announced through a merger with a SPAC.
In an interview with CNBC’s “Squawk on the Street,” CEO Ron Coughlin said the company has competitive advantages over its competitors. He said it adds veterinary services to more of its stores, leading to pet owners buying supplies and food while they are there. He said it could use its stores to make online orders. And he said same-day delivery could accelerate competitors on speed and price.
Correction: Petco shares traded on the Nasdaq exchange. In a previous version, the exchange was incorrect.