How to Invest in Skims in 2024

If you're keeping up with the Kardashians, you may be wondering how to invest in Skims. Skims is the shapewear, underwear, and clothing line created by Kim Kardashian and her business partners Emma Grede and Jens Grede. The company's success blasted Kardashian into the billionaire's club. In its latest round of funding, it was valued at $4 billion.

Because Skims isn't publicly traded, most people can't invest in the company at this point -- but that could soon change. We'll cover what you need to know about investing in Skims, including the latest whisperings that the company will launch an initial public offering (IPO) in 2024.

Is Skims publicly traded?

Is Skims publicly traded?

Skims was not publicly traded as of late 2023, so most people can't invest in the company just yet. The New York Times reported that Kardashian and co-founders Jens and Emma Grede were the company's majority stakeholders in a July 2023 profile.

Skims recently went through its Series C funding round, often the last round of venture capital financing for a company before its IPO. Investment firm Wellington Management, a frequent investor in pre-IPO companies, led the latest round of funding.

When will Skims IPO?

When will Skims IPO?

Although there's no date for Skims' trading debut on the IPO calendar yet, the company seems poised for a 2024 IPO, according to various reports. Several prominent companies have delayed IPO plans after a spate of lackluster IPOs in 2023. Many investors believe IPO activity will surge once again in 2024, particularly if the Federal Reserve cuts interest rates.

How to buy

How to buy Skims stock

Once a company goes public, investing in its stock is as simple as opening a brokerage account, funding it, and placing your order. (We'll cover the steps in greater detail shortly.) But to invest in Skims or any other stock that isn't publicly traded, you'll need to be an accredited investor -- which basically means you need a high net worth or income, or you need to hold a financial license.

If you meet the accredited investor criteria, you may be able to invest in pre-IPO stocks through platforms like Forge Global (FRGE 0.52%) or EquityZen. Otherwise, you'll need to wait until the company goes public to acquire shares. In the meantime, here are three stocks you can buy if you have a brokerage account that can help you seize on similar market opportunities.

Nordstrom

Although most of Skims' sales take place through Skims.com, Nordstrom (JWN 0.68%) is one of the largest retailers that carries the brand both in its physical stores and online. The past few years haven't been kind to this retail stock, as sales have been at or below pre-pandemic levels for three years in a row.

But there are a few reasons to be optimistic about the stories retailer, including its growing gross margins and decreasing inventory. (Lower inventory tends to be good for retailers because they don't have to slash prices to make room for new inventory).

The chain has a strong presence in both the luxury market through its full-price stores and the discount market through its Nordstrom Rack stores. Plus, the stock currently pays a generous dividend, making it appealing to income investors.

e.l.f.

The New York Times reports that approximately 70% of Skims customers are millennials or Gen Zers. If you're looking to capitalize on the growing spending power of younger demographics, e.l.f. Beauty (ELF 2.04%) deserves a look. The cosmetic brand is wildly popular among Gen Z and has a huge following on social media platforms like TikTok and Instagram.

e.l.f. now ranks third in terms of cosmetic market share, having doubled its market share in the past four years alone. The company announced its 19th consecutive quarter of net sales growth in November 2023 and continues to grow margins. e.l.f.'s recent acquisition of Nutrium will double its market share in skin care to about 18%.

Lululemon

Skims may be best known for selling underwear and shapewear, but its best-selling items include athleisure clothing and loungewear, like leggings, tank tops, joggers, and hoodies. The global athleisure market is forecast to grow at a compound annual growth rate (CAGR) of 9.1% through 2030.

Lululemon (LULU 1.31%) has long been a darling in the world of athleisure. Even as many customers grow antsy about discretionary purchases, Lululemon's total sales were up 21% year over year in the second quarter of 2023, with increased e-commerce sales and foot traffic in physical stores driving its performance. The company continues to boost its gross margin and has considerable room to grow as it expands its presence in international markets.

If you're interested in investing in any of the above companies, you can do so in just a few easy steps.

1. Open a brokerage account

To open a brokerage account, you'll need to decide the kind of account you want. If you're looking to save for retirement, an individual retirement account (IRA) is a good choice because it offers tax advantages, although you may be penalized for withdrawals before age 59 1/2. If you want access to your money at any time, a taxable brokerage account is the way to go.

When you compare brokers, look for an account with low fees and account minimums. Once you've selected a broker, you'll need to provide some key information, like your address, date of birth, and Social Security number. Once you've opened your account, you'll need to deposit funds. The easiest way to do this is typically with an electronic fund transfer.

2. Figure out your budget

Your next step is to determine your overall investing budget and how much of it you want to go toward individual stocks, be it Skims (if the company goes public), the companies discussed above, or any other company. Building a diversified portfolio is essential. You want to spread your risk across multiple companies.

The Motley Fool recommends building a portfolio of at least 25 companies. If handpicking 25 individual stocks sounds overwhelming, that's OK. The best index funds offer automatic diversification. After you've built a portfolio of index funds, you can then layer on individual stocks you believe have market-beating potential.

3. Do your research

Before you put money into an investment, you need to do your homework. Researching stocks isn't just about analyzing financial statements. Make sure you have a solid understanding of what competitive advantages a company has, as well as industry trends that make it a compelling investment.

4. Place your order

Once you've decided a stock deserves a place in your portfolio, it's time to place an order. You'll need to log in to your brokerage account and enter the stock's ticker, as well as the number of shares you wish to buy.

You'll also need to specify whether you're placing a market order or a limit order. With a market order, you're buying shares immediately at the current market price. With a limit order, you only buy the stock if it reaches a specified price threshold.

Profitability

Is Skims profitable?

Chief executive Jens Grede told The New York Times that Skims is profitable in July 2023. The company was on track for $750 million in sales for 2023, up from $500 million in 2022.

Should I invest?

Should I invest in Skims?

As of this writing, it's not possible to invest in Skims unless you're an accredited investor. However, if the company goes public, as many observers anticipate in 2024, you can buy shares through your brokerage account.

Bear in mind, though, that buying IPO stocks isn't always possible for regular investors. You can request shares from your broker at the IPO price, but you may not get the number of shares you request -- or any at all. Brokers often receive a limited number of IPO shares and reserve them for institutional investors and high-net-worth customers.

If you cannot get in on Skims' actual IPO, you'd need to wait to purchase shares until the stock starts trading on a stock exchange. Just be aware that investing in companies immediately after their IPO is risky because there's less information available compared to well-established publicly traded companies, and you could wind up overpaying due to hype.

Here are some reasons you might want to add Skims to your portfolio if the company does, in fact, go public:

• You're a fan of Skims' products.
• You already have a diversified investment portfolio but want additional exposure to the retail industry or the consumer discretionary sector.
• You plan to hold the stock long term and wouldn't lose sleep if the price tanked in the short term.
• You believe the company has a strong competitive advantage and that it has the potential to produce market-beating returns.

ETF options

ETFs with exposure to Skims

Basically, exchange-traded funds (ETFs) are a basket of stocks bought and sold as a single investment. Since Skims isn't a publicly traded company yet, you won't find ETFs with exposure to the stock.

However, plenty of ETFs focus on similar investment themes.

• Vanguard Consumer Discretionary ETF (VCR 1.2%): Skims is an example of a consumer discretionary company. In other words, Skims makes products customers buy when they have extra money to spend. The ETF invests in more than 300 small-, medium-, and large-cap consumer discretionary stocks represented in the MSCI US IMI Consumer Discretionary 25/50 Index. The fund was up more than 30% year to date as of November 2023, reflecting the surge in consumer discretionary stocks following an abysmal 2022.
• SPDR S&P Retail ETF (XRT 1.4%): If you're bullish on retail stocks, this ETF has 78 holdings in the retail sector and tracks the performance of the S&P Retail Select Industry Index. Over a quarter of its holdings were concentrated in apparel retail as of Nov. 30, 2023.
• Renaissance IPO ETF (IPO 2.16%): If you're looking for broad exposure to recent IPO stocks, the Renaissance IPO ETF is an option. This is the only ETF focused exclusively on recent IPO stocks in the U.S. It has 68 holdings and rebalances quarterly as new companies make their stock market debuts. Companies are removed three years after their IPO.

Related investing topics

The bottom line on Skims

Skims has a strong customer base driven by the Kardashian's widespread popularity and social media presence. It's especially popular among millennial and Gen Z women, many of whom are drawn by the brand's promotion of body-inclusive sizing.

That said, investing in any individual stock can be risky, but that's especially true for IPO stocks. The risk of consumer discretionary stocks can also be especially pronounced if customers curb their spending due to an economic downturn or their concerns that a recession is on the horizon.

Skims could be a good addition to an already-diversified portfolio, depending on your investment goals and whether you're a long-term investor. But since it hasn't filed to go public yet, there's a lot we still don't know.

If the company does go forward with an IPO, be sure to read its Form S-1 -- the registration form companies going public are required to file with the Securities and Exchange Commission. That way, you will thoroughly understand its business before you invest.

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