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If you’ve grown up with the American education system, you’ll no doubt remember the lesson when your teacher asked you to draw what you wanted to be when you grew up. From police officers to astronauts to deep cave explorers, children’s imaginations ran wild. Whatever those aspirations are, it’s a guarantee that no kid dreams about inputting “Vlookup” functions in Excel spreadsheets.
Yet that’s where 99% of those dreams end up. How then do jaded adults cope with the banality of even some of the most illustrious occupations? Coffee — lots and lots of coffee, which segues into the upcoming initial public offering (IPO) of Dutch Bros. From humble beginnings as a pushcart business in downtown Oregon, Dutch Bros has blossomed into the largest privately held drive-thru coffee chain in the U.S.
However, that status is about to change, with public investors eager to bank on the next big name in the consumer discretionary market. As well, with the country gradually returning to normal, the timing couldn’t be better.
When is the Dutch Bros IPO Date?
Not unlike other traditional public market debuts, the road to the Dutch Bros IPO has been a lengthy one. Initially, the drive-thru coffee chain confidentially submitted its intent to go public with the U.S. Securities and Exchange Commission (SEC) on June 15, 2021. At the time, the company did not disclose the number of shares to be distributed nor a proposed price range.
Later, on August 23, Dutch Bros clarified its offering, inputting an initial plan to raise $100 million. Several days later on September 7, the company’s management team disclosed that it will offer approximately 21.1 million shares, with an estimated range between $18 to $20 per each unit. At the top end, Dutch Bros could raise more than $421 million. According to a Reuters report, the coffee chain is aiming for a valuation of over $3.3 billion.
On the same day, Dutch Bros also announced that it had commenced its roadshow, or a meeting with prospective investors ahead of an IPO to drum up interest for the offering and ensure adequate demand. Powerhouse financial firms Bank of America (NYSE: BAC), JPMorgan Chase (NYSE: JPM) and Jefferies Financial Group (NYSE: JEF) stepped in as lead bookrunning managers and the representatives for the underwriters of the proposed deal.
Should everything go according to plan, Dutch Bros will make its debut on the IPO calendar on September 15. Shares will trade on the New York Stock Exchange under the ticker symbol BROS, appropriately enough.
According to the local paper The Oregonian, BROS stock could be the biggest IPO in the state’s history. Per journalist Mike Rogoway, “No Oregon company has raised more than $100 million in an IPO since 2004, and the state hasn’t produced any really large new companies in decades. It’s fitting, perhaps, that the company positioned to break that long losing streak makes something Oregon is well known for — coffee.”
Dutch Bros Financial History
Though a cynical concept, it cannot be avoided that in business, one company’s pain is another company’s opportunity. The devastation of the COVID-19 pandemic is proving this statement true for the retail coffee industry. Following a strong series of growth heading into 2020, some of the biggest international coffee chains looked forward to another outsized performance.
Instead, the SARS-CoV-2 virus watered down the brew in an unprecedented manner. According to a September 2020 article from The Guardian, experts projected the U.S. market — the world’s biggest for cafes — to fall nearly 11%. Contributing to the dilemma were expansionary business strategies originating from household names like Starbucks (NASDAQ: SBUX) and U.K.-based Costa, with the latter having “spurred strong growth in Thailand, Malaysia, Indonesia and across eastern Europe.”
As international government agencies clamped down on non-essential activities, popular retail outlets across the board suffered an initial gut-wrenching blow. But while the majors are picking up the pieces and attempting to claw back missed revenues, Dutch Bros is just now starting its journey as a publicly traded company — right in time to meet a consumer market on the mend.
But Dutch Bros isn’t just a product of fortuitousness. Instead, its own financials demonstrate that the business truly resonates with consumers. As an example, Starbucks generated $23.5 billion in its fiscal year ended Sept. 30, 2020, which actually represented an 11.3% year-over-year loss. Further, it was the first time since the Great Recession that SBUX sales slipped on an annual basis.
In contrast, Dutch Bros rang up top-line sales of $244.5 million in 2020 (ended December 31), a staggering 61% lift from 2019’s tally. As well, in the 6 months ended June 30, 2021, the company is looking at revenue of just under $228 million. In other words, Dutch is all but set to obliterate 2020’s remarkable banner performance.
Dutch Bros Potential
Ask any working adult what the most consumed beverage (not including water) is and chances are, you’ll hear coffee the majority of the time. However, as National Geographic reminded us in 2014, the answer is tea — and it’s not even close. In some ways, the comparison isn’t fair because tea predates coffee by approximately 3,000 years. Also, it’s widely consumed in China, which has a population size more than 4 times the U.S.
However, we may soon see a paradigm shift. Across the world, Chinadaily.com reported that the nation’s “coffee consumption has expanded by an average annual rate of 16 percent over the past decade, and its market is expected to grow to about 300 billion yuan (about $42.3 billion) by 2020.”
Of course, that’s a general catalyst for any coffee chain looking eastbound for international expansion. Closer to home, BROS stock enjoys several headwinds that could help lift its valuation and broader market presence.
Primarily, management is looking to expand its already respectable footprint. At time of writing, Dutch Bros has over 420 locations in 11 states. But former CEO and co-founder Travis Boersma stated that the brand could add up to 400 new locations in the next 3 to 5 years.
Moreover, Starbucks has on more than one occasion stepped into ugly controversies. Thanks to a fun, non-politically motivated corporate ethos, Dutch Bros can easily snag customers looking to un-Starbucks their lives.
How to Buy Dutch Bros IPO (BROS) Stock
Despite myriad upshots to the BROS stock introduction, it’s not without its challenges. On a business level, Dutch Bros’ blue-chip rivals have the financial resources to stymie the company’s growth trajectory, particularly if it moves into higher-traffic markets.
Administratively, BROS stock will enter the public market via the traditional manner. That leaves most investors to acquire shares at the open, which may be disadvantageous due to the possible IPO pop.
But not all offerings are guaranteed to drive higher from the get-go. Also, procuring on launch day is easy if you already know how to buy stocks. If you don’t, follow the simple steps below.
Step 1: Pick a brokerage.
If you’re ready to caffeinate your IPO game, you should narrow your list of best brokers to platforms that provide access to select pre-IPO shares or equity units at their initial offering price.
Step 2: Decide how many shares you want.
No matter what sector an IPO is tied to, new issues are incredibly unpredictable. To mitigate this uncertainty, choose a balanced share count that will facilitate adequate rewards but won’t devastate your portfolio if your thesis goes awry.
Step 3: Choose your order type.
Before placing your first order, acquaint yourself with these market concepts.
- Bid: The buyer’s top offer for a stock.
- Ask: The seller’s lowest satisfactory price.
- Spread: The difference between the bid and ask price, the spread also signals market liquidity and risk, with narrower spreads indicating a high-volume, low-risk market while broader spreads indicate the opposite circumstance.
- Limit order: Buy or sell requests at a predetermined price, limit orders provide transparency but no execution guarantees.
- Market order: Market orders guarantee fulfillment but only at the prevailing rate, which constantly differs.
- Stop-loss order: A protective function, a stop-loss order automatically exits your position at either a predetermined price or anything lower.
- Stop-limit order: Stop limits are similar to stop losses 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:
- Select your action type (buy or sell).
- Enter the shares you want to acquire (or sell).
- Hit the Buy (or Sell) button.
Follow the same sequence for limit orders (but include your execution price).
BROS Restrictions for Retail Investors
Review the Financial Industry Regulatory Authority (FINRA) rules on restricted persons if you believe you may have conflicts of interest regarding an IPO. Securities laws harshly penalize improprieties, so it’s better to be safe than sorry.
For those interested in accruing IPO opportunities, you should open an account with ClickIPO, which democratizes the rarefied public offering process by offering pre-IPO access for select enterprises.
Order an IPO Espresso
One of the biggest challenges of any retail-related IPO is competition. Due to lower barriers of entry, theoretically almost anyone can participate effectively in the arena. However, what separates BROS stock from other public debuts is its underlying brand. Resonating deeply with consumers and translating to strong growth through storms that capsized its rivals, Dutch Bros could find robust long-term success.