Contributor, Benzinga
September 21, 2021
$9.00
-1.47[-14.04%]
Last update: 8:04AM (Delayed 15-Minutes)
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Open10.890Close10.400
Vol / Avg.8.039K / 10.307KMkt Cap95.645M
Day Range10.100 - 10.89052 Wk Range3.600 - 19.680

For the fashion and apparel industry, the COVID-19 pandemic wasn’t just a tragedy for the human and economic costs that rippled across the world. It was that to be sure, with countless lives disrupted permanently while the broader business community has been left desperately clawing back a pivotal recovery.

But for those who are tasked with driving trends, the coronavirus outbreak has been an unmitigated disaster for one reason: too many people had let themselves go, and because of pandemic-related restrictions, no incentive existed for individuals to up their public presentability.

Indeed, Karen Heller of The Washington Post dryly noted last December that America was having its pajama moment. Through podcasts and wish lists and Christmas catalogues, retailers hawked the unofficial uniform of the quarantine. In the background, fashionistas endured the saline bitterness of their misery.

When did a.k.a. Brands IPO?

a.k.a. Brands presents a distinct opportunity. While other enterprises may have a larger following or more innovative businesses, what makes a.k.a. Brands especially enticing is that the underlying company represents a direct play on the normalization of society.

For instance, a software company must prove to its target clients who are already deeply entrenched in digital operations that its solution is superior to the competition. With a.k.a. Brands, though the competitive challenge exists, the fashion-centric firm benefits from the movement of larger forces. Should the “old normal” materialize, demand will come to a.k.a., requiring less emphasis on aggressively chasing revenue opportunities.

As such, speculators are seeking to bank on societal undercurrents. a.k.a. Brands made its debut on the IPO calendar on Sept. 22, 2021. Shares trade on the New York Stock Exchange under the ticker symbol AKA.

To be completely transparent, fashion and other retail businesses tied to luxury goods typically ply their trade in a hypercompetitive arena. Founded in 2018, a.k.a. Brands admittedly doesn’t have the provenance of its more established competitors. But that hasn’t stopped major financial backers from supporting this IPO.

First, the San Francisco, California-based company plans to raise $250 million in its debut through an offering of 13.9 million shares, priced between $17 and $19 per unit. In the middle of the spectrum, a.k.a. will command a fully diluted market value of $2.3 billion.

Second, some of the largest financial institutions are acting the role of joint bookrunners on the deal, which are Bank of America (NYSE: BAC), Credit Suisse (NYSE: CS), Jefferies Financial Group (NYSE: JEF), Wells Fargo (NYSE: WFC), KeyBanc Capital Markets, Cowen (NASDAQ: COWN), Piper Sandler (NYSE: PIPR) and Truist Financial (NYSE: TFC).

a.k.a. Brands Financial History

On the other end of the fashion spectrum, millions of worker bees undoubtedly relished the requirement to only look good from the waist up. Even then, it was only a temporary constraint as most people performed their jobs in silence as opposed to making constant appearances on teleconferencing platforms.

However, the days of wardrobe indiscipline are fading quickly — and this is no merely anecdotal observation. Rather, hard evidence from government sources reveal that American society has essentially grown tired of voluntary isolation. For instance, the U.S. Bureau of Transportation Statistics revealed that in May 2021, vehicle miles traveled represented nearly 62% growth from levels seen in April 2020.

And where are people going? Other government sources reveal that retail sales at eating establishments jumped 2.5 times between April 2020 and July 2021. Also, between the 2nd quarters of 2020 and 2021, revenue for promoters of performing arts, sports and similar events almost tripled. These statistics combine to formulate one undeniable conclusion: whether for personal reasons or professional, people are out in public and on the move.

Naturally, the wardrobe department has to meet a modicum of acceptability. Further, younger people are more susceptible to peer pressure and the desire for social approval and validation. Frankly, you couldn’t ask for a better fundamental catalyst for AKA stock.

What’s most impressive about the underlying investment thesis is that the narrative is credible. In 2019, a.k.a. generated revenue of $102.4 million. But in the pandemic-disrupted year of 2020, it managed to ring up $215.9 million in the top line or a year-over-year growth rate of nearly 111%. Further, for net income, the fashion brand posted $14.8 million last year, a staggering improvement of 957% over the $1.4 million delivered in 2019.

Given that 2021 saw significant reopening measures, a.k.a. is poised for even greater growth and profitability.

a.k.a. Brands Potential

Looking over the horizon, both the loosening of COVID-19 protocols and the vaccination rollout bodes very well for AKA stock as this combined dynamic expands opportunities for people to get out of their homes. Additionally, many white-collar workers who had the opportunity to operate remotely — and thereby save on pre-pandemic expenses like commuting costs — are sitting on substantial cash reserves.

With young people in particular looking for an excuse to spend, a relevant company like a.k.a. could accrue benefits. Additionally, the below factors suggest strong potential for AKA stock.

  • Return to school: When COVID-19 upturned paradigms across the globe, worker bees weren’t the only folks adjusting to the new normal. University students likewise made massive adjustments through remote learning protocols. However, many U.S.-based higher education institutions have reinstated in-person classes for the fall semester — and students are happy about the shift. Also satisfied are prospective stakeholders of AKA stock, who may benefit from the apparel upgrade.
  • Return to work: Unlike students, members of the labor force have a contrasting view on remote operations. According to a December 2020 report from the Pew Research Center, more than half of surveyed workers state that “given a choice, they would want to keep working from home even after the pandemic.” However, a growing number of companies are not sympathetic to this sentiment, mainly due to telecommuting inefficiencies. What’s bad for corporate employees is good for AKA stock thanks to another source of wardrobe upgrading.
  • Return to love: It goes without saying that the lockdowns represented serious hardships for singles. Because of the pandemic, the concept of intimacy took on a somber tone. However, through the vaccine rollout and general acclimatization, these same singles are now ready to mingle. And that naturally spells revenue spikes as people dress to impress.

How to Buy a.k.a Brands (AKA) Stock

Admittedly, one of the drawbacks of a.k.a. Brands’ is that it follows the traditional route. In large part, this circumstance translates to underwriters providing new issues at their original price to their choicest clients — almost always institutional investors.

However, the acquisition process for retail investors is straightforward, especially if you know how to buy stocks. If not, follow the steps below.

Step 1: Pick a brokerage.

While you can use any brokerage to acquire AKA stock, serious IPO investors should narrow their list of best brokers to platforms that provide select pre-IPO access or access to shares at their initial offering price.

Step 2: Decide how many shares you want.

No matter what sector your target IPO is in, new issues are always risky. Therefore, you should choose a balanced share count, one that facilitates ample rewards but also limits downside should your plan go awry.

Step 3: Choose your order type.

Before placing your first order, acquaint yourself with these market concepts.

  • Bid: The buyer’s best offer for a stock.
  • Ask: The seller’s bottom-dollar price.
  • Spread: The bid-ask price difference (and thus the broker’s term of profitability), the spread also denotes risk. A wider spread is more profitable for brokers because they must make the market on a risky transaction.
  • Limit order: Buy or sell requests at a specific price, limit orders provide transparency but no execution guarantees.
  • Market order: Market orders guarantee fulfillment but only at the current rate.
  • Stop-loss order: A measure to cut your losses, stop-loss orders automatically exit your position at either a predetermined price or anything lower.
  • Stop-limit order: Stop-limit orders are likewise protective but only execute (exit) at a predetermined price. However, such orders carry the same non-fulfillment risk as limit orders.

Step 4: Execute your trade. 

To execute a market order, follow these steps:

  1. Select your action type (buy or sell).
  2. Enter the shares you want to acquire (or sell).
  3. Hit the Buy (or Sell) button.

Follow the same sequence for limit orders (but include your execution price).

About Joshua Enomoto

His distinct writing style of distilling convoluted data into relatable and compelling narratives has earned him recognition among several investment-related publications.