From the miracle at the marriage at Cana to rapidly becoming one of the indulgent beverages of choice among young consumers, wine features a long and colorful history. Even among polite company, wine is the antithesis of the pejorative image of the malt liquor bottle wrapped in a brown paper bag. Indeed, the acceptability of a glass of cabernet sauvignon has helped the broader industry achieve lasting relevance.
Still, wine as an economic endeavor has encountered a perplexing mix of viability and opportunity gaps. Generally speaking, writes Julia Coney of The Washington Post, “millennials think of wine as a social drink, a connector that is meant to be shared. They look at wine as entertaining and engaging.”
“While the industry frets about losing young drinkers to hard seltzer, the seltzer companies do a much better job of marketing to millennials and Gen-Z drinkers,” Coney added. And this dynamic represents one of the biggest challenges for vintners at scale: though the demand for wine is strong, who can break through the whimsical wall of millennial consumerism?
Celebrities Nina Dobrev and Julianne Hough may have the answer. In addition to their entertainment talents, both are astute entrepreneurs, co-founding Fresh Vine Wine, Inc., a producer of low-carb, low-calorie premium wines. Here’s what you need to know about the company’s initial public offering (IPO).
When Is the Fresh Vine Wine IPO Date?
To be famous is nearly impossible when assessing base probabilities and even more difficult to sustain such celebrity status. Therefore, Dobrev and Hough have in many ways already accomplished the difficult part of their career aspirations. Nevertheless, achieving success in the capital markets poses its own set of challenges.
Similar to the underlying industry, the timing of Fresh Vine Wine’s public market debut presents both upside prospects and downside risks. Stamping its inclusion on the IPO calendar on Dec. 14, Fresh Vine enters a record-breaking arena for new issues. According to a Reuters report, with only weeks remaining in 2021, U.S. IPOs have already raised over $301 billion. Naturally, the vintner seeks to pad this figure.
Such ambitions are not unreasonable. Last year, The Wall Street Journal observed that a paradigm shift materialized in the retail investment sector. Suddenly, everyday worker bees who may not have given the Dow Jones Industrial Average a second look were now eagle-eyeing basis points and bid-ask spreads. Given that stock trading on margin continues to soar at unprecedented levels, Fresh Vine Wine can easily grab attention, especially with Dobrev and Hough fronting the IPO’s marketing efforts.
Further, early evidence points to a successful deal. On Dec. 13, the company announced the pricing of its IPO at $10 per share, with a distribution amount totaling 2.2 million shares. This figure was at the high end of the estimate range, with the low end being $9. Also, the sole underwriter for the deal, Oak Ridge Financial, has a 45-day option to purchase an additional 330,000 shares from Fresh Vine at the initial offering price.
Shares trade on the NYSE American exchange under the ticker symbol VINE. Subject to customary closing conditions, this IPO is scheduled to close on Dec. 16.
Although sentiment may be strong for new public issues, the frenetic IPO market itself can be a distraction. With so many opportunities flashing on investors’ radar, they collectively may not have enough money to bid up VINE stock like they may have had the underlying ecosystem been more subdued.
But perhaps the biggest outside headwind barreling down on Fresh Vine is rising inflation fears. Should the Federal Reserve decide to remove the punch bowl of monetary stimulus and subsequently raise the cost of borrowing, risk-on assets — such as newly issued IPOs — could take a beating. Indeed, global investment indices are already flashing red.
Fresh Vine Wine Financial History
Back in 2018, Grand View Research indicated that it projected the domestic wine market to reach $85 billion by 2025, noting that rising “per capita consumption of wine with meals and desserts is expected to drive growth.”
Further, the research firm cited consumer access to wine in stores, restaurants, bars, nail salons, bookstores, coffee shops, movie theaters, car wash and repair shops. Ultimately, the number of venues supporting sales could expand to over 5.5 million locations in the U.S.
Beyond physical retail channels, Grand View states that “producers are targeting niche sales channels such as direct-to-consumer sales and tasting rooms.” And this is where Fresh Vine Wine enters front and center stage, leveraging its quarterly direct-to-consumer shipments to align with important seasonal events, such as Valentine’s Day.
To be fair, the wine market — as has other business sectors — changed dramatically because of the COVID-19 pandemic. Nevertheless, you can make a case that for VINE stock, the transition could be a lucrative one. Particularly, e-commerce channels have garnered tremendous relevance as the lockdown period translated to a free marketing program for subscription services like Fresh Vine.
Furthermore, Fresh Vine presents a double whammy in terms of the COVID-19 effect. First, stress levels soared during the new normal, according to the American Psychological Association. Further, it reports that prolonged stress persists at elevated levels. Second, the same source also noted 42% of Americans suffered from undesired weight gain since the start of the pandemic.
Fortunately, recent research indicates that “resveratrol, which is found in red wine, displays anti-stress effects by blocking the expression of an enzyme related to the control of stress in the brain.” As well, Dobrev and Hough are able to maintain their fitness routine while indulging in part because Fresh Vine features lower calories, carbs and sugar content.
On its books, Fresh Vine features blistering growth. In the nine months ending Sept. 30, 2021, the company generated $517,014, up 527% from the year-ago period. But that’s also part of the problem. If your company is generating less than a million bucks a year, growth should be high.
Also, investors will not like that in the nine months of this year, the company generated a staggering loss of $8 million. Therefore, extreme care is necessary for this IPO.
Fresh Vine Wine Potential
Although the financial figures undergirding VINE stock will certainly require turbo boosting, Fresh Vine Wine can also leverage its star power, affording this aspirational play an ambiance of credibility that so many other speculative trades lack.
For instance, at the start of the NFL season, the Los Angeles Chargers — formerly of San Diego — announced a new multi-year partnership agreement with Fresh Vine. This deal allows fans to enjoy Fresh Vine Wine at select bars at SoFi Stadium, including their California cabernet sauvignon, pinot noir, chardonnay and newly released rosé. That the co-founders are celebrities only heightens the company’s brand appeal.
Nevertheless, Fresh Vine needs to act quickly to overcome the huge revenue-to-net-loss gap. More critically, the subscription business model may suffer obstacles, especially because consumer trends in many markets are shifting back to pre-pandemic norms. For instance, the retail revenge phenomenon underlies a burgeoning desire among Americans to connect in person.
As with any IPO, you must conduct your due diligence, setting aside the distraction of celebrity endorsements.
How to Buy Fresh Vine Wine IPO (VINE) Stock
With VINE shares making their debut, interested investors must acquire shares at the open, necessitating knowledge in how to buy stocks. To recap, follow the steps below.
Step 1: Pick a brokerage.
Everything starts with the right brokerage. Since most compete on similar financial incentives, narrow your list of best brokers to institutions that align with your needs.
Step 2: Decide how many shares you want.
IPOs are always risky because of multiple unknown variables. Therefore, choose a balanced share count to mitigate potential downside swings.
Step 3: Choose your order type.
Before trading, learn these market concepts.
- Bid: The buyer’s best offer for a stock.
- Ask: The seller’s lowest acceptable price.
- Spread: The difference between the bid-ask price, the spread indicates market risk as this is also the profit margin for market makers.
- 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 current rate.
- Stop-loss order: Stop-loss orders automatically exit your position at either a predetermined price or anything lower.
- Stop-limit order: Stop-limit orders only leave positions at a specified price, but they also carry non-fulfillment risks.
Step 4: Execute your trade.
Follow these steps to execute a market order:
- 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).
VINE Restrictions for Retail Investors
Review the Financial Industry Regulatory Authority (FINRA) rules on restricted persons before participating in an IPO. Don’t engage if you have privileged information.
While you can’t buy VINE on a pre-IPO basis, those who want to build their IPO acumen should consider SoFi Invest, which provides early access to select public market debuts.
Hot Debut or a Hot Mess?
On the surface, Nina Dobrev and Julianne Hough easily have the potential to bolster the wine industry’s marketing gap, thus benefiting the Fresh Vine Wine IPO. However, the timing of the debut is problematic because of wider market pressures. Additionally, the financials must improve soon or risk losing investor confidence.
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.