There was plenty of buzz behind last week's busy IPO schedule, including the well-received offering from lithium ion battery maker A123 Systems
A123 and Shanda Games priced at the high end of expectations, but Vitacost's 11 million shares went to market at $12, smack-dab in the middle of its expected range.
That's a pity, because Vitacost's heady top-line growth certainly merits attention.
Year |
Net Sales |
Operating Profits |
Net Profit |
---|---|---|---|
2006 |
$66.4 million |
$0.2 million |
$0.2 million |
2007 |
$99.3 million |
$0.3 million |
$1.8 million |
2008 |
$143.6 million |
$1.7 million |
$0.0 million |
Source: Form S-1/A filing.
Worrywarts will naturally gravitate to the pathetic margins. Even with marked improvement in operating profits last year, operating margins that clock in at a mere 1% -- and barely breaking even on the bottom line – aren't all that exciting.
I guess that's why Vitacost waited until now to go public. Through the first six months of 2009, net sales rose 36%, with $11.9 million in operating profits and $7.2 million in net income.
Is the e-tail sector cutthroat? You bet. But 32% of Vitacost's net sales last year came from proprietary products. That's a real differentiator in a niche where every competitor is a click away.
The financials also compare favorably to the slower-growing and marginally profitable drugstore.com
Shares of drugstore.com have nearly quadrupled since bottoming out in March. Larger e-tailers Amazon.com
Friday's debut of Vitacost was light on octane. The shares opened exactly at the $12 IPO price. Trading volume may have been a brisk 616,000 shares, but the stock moved in a tight range, closing at a yawn-inducing $11.98 sticker price.
If Vitacost's model is scalable -- and the first six months of cautious overhead growth is the real deal, and not just a ruse to butter up the pre-IPO income statements -- this is a new offering that the market won't ignore much longer.
Have you bought into any of the IPOs of 2009? Share your thoughts in the comment box below.