How to Buy Yoshitsu Stock

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Contributor, Benzinga
January 19, 2022
$0.2395
0.0009[0.38%]
Last update: 7:02AM (Delayed 15-Minutes)
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Open0.240Close-
Vol / Avg.75.625K / 446.194KMkt Cap10.112M
Day Range0.233 - 0.24152 Wk Range0.212 - 1.690

As a rather stern-looking man walked through the rough and tumble streets of New York City, a voiceover provided much-needed context: “The best ideas come from solving common problems.” According to the gentleman in question, Chris Riccobono, founder and CEO of UNTUCKit, his main concern was finding a shirt that could be presentably displayed over the beltline.

Because of the serious tone of the above commercial, several audience members — including comedian Jim Gaffigan — encountered confusion with the messaging, wondering if it was deliberate bathos. While Riccobono subsequently embraced the notoriety as a form of organic marketing, the original ad also touched upon a sociologically controversial but scientific fact: different human populations evolved phenotypic attributes suitable for their surrounding environment.

To be 100% clear, the University of California, Santa Barbara states that there is “much more genetic variation within any given population of humans than all the variation between human populations.” But by logical deduction, the expression of phenotypic variance borne out of evolutionary necessity has caused challenges for the fashion and apparel industry, especially in the richly diverse U.S. market.

In the same token, the cosmetics industry shares similar teething issues, balancing sociological sensitivities with scientific and economic realities. However, this awkward dynamic could also be an underappreciated catalyst for health-and-beauty specialist Yoshitsu Co.

What Is Yoshitsu?

Headquartered in Tokyo, Japan, Yoshitsu is a relatively recent player in the island nation’s health-and-beauty industry, having been founded in December 2006. According to its website, the company generates revenue through four business outlets:

  • Management of drugstores
  • Retail of cosmetics, health foods, daily necessities, decorative goods and snacks
  • Operation of its e-commerce platform
  • Mail-order business through internet catalogs

According to Yoshitsu’s Form F-1 registration statement, the company offers “approximately 12,400 SKUs [stock keeping units] of beauty products, including cosmetics, skin care, fragrance and body care, among others, 3,600 SKUs of health products, including OTC drugs, nutritional supplements, and medical supplies and devices and 7,900 SKUs of other products, including lingerie, home goods, food and alcoholic beverages.”

When Is the Yoshitsu IPO Date?

As a foreign company, Yoshitsu encounters multiple complexities not found in a U.S.-listed initial public offering (IPO), or the first time a private enterprise distributes its equity shares for public (retail) investment. Prior to going public, a business will often raise capital through private-equity raises, which usually limit access to institutional or accredited investors. By widening this distribution channel, a private firm can dramatically increase its funding potential.

One of the immediate nuances you will notice with Yoshitsu is the date it will enter the IPO calendar. Shares will debut on the Nasdaq exchange under the ticker symbol TKLF on Jan. 18. However, the pricing of the IPO occurred on Jan. 8 (a Saturday), with the offering closing on Jan. 13. Much like a used car is new to the buyer, TKLF stock will be a fresh listing for American investors.

As a foreign stock, investors will technically be acquiring shares of American depositary receipts (ADRs), which as Benzinga contributor Jordan Schneir explained, “represent a specified number of shares in a foreign corporation.” ADRs — which are issued by U.S. depositary banks — trade like any other stock. Primarily, their benefit stems from access, allowing American retail investors to easily acquire foreign shares that they could not normally purchase.

For Yoshitsu specifically, the company distributed 6 million American depositary shares (ADSs) at a price of $4 each, resulting in a $24 million gross raise before deducting expenses related to the deal. At this pricing, the company commands a market value of $144 million. Univest Financial Corp. (NASDAQ: UVSP) represented the sole bookrunner for the IPO.

As with any investment, you must conduct careful due diligence with Yoshitsu. But because the company primarily operates in Japan and China — although with some overseas partnerships including the U.S. and Canada — prospective buyers of TKLF stock must take extra precautions. Mainly, preconceived notions of what might work in the U.S. could be akin to inadvertently hosing an electric fence; in other words, quite the shock.

Another factor to consider irrespective of geographical risks is the capitalization. As Benzinga contributor Sarah Horvath stated, a micro-cap stock typically features a valuation between $300 million and $2 billion. Horvath continued, noting micro caps “are often smaller, less established operations.” By deduction, Yoshitsu is a nano-cap play — even smaller and riskier than micro caps, though arguably with greater upside potential.

Indeed, with any luck, TKLF could become one of the best penny stocks under $5.

Yoshitsu Financial History

Though many observers recognize Japan as a leader in electronics-related technologies, it’s also a powerhouse in the health-and-beauty segment. According to Mordor Intelligence, “Japan is one of the largest markets for cosmetic and personal care products across the globe.”

Further, the research firm states that “Japanese consumers are extremely sophisticated and well informed regarding the chemical formulations in hair products. Natural ingredients and organic formulations are witnessing high demand in the market, which is driving key manufacturers to launch products with natural/clean product labels.”

According to Japan’s Ministry of Economy, Trade and Industry, the health-and-beauty sector reached a valuation of $35 billion in 2019, a tally behind only the U.S. and China. The country also is home to approximately 3,000 beauty care companies. Conspicuously, companies deploying direct-to-consumer (D2C) business models blossomed in 2020 despite the COVID-19 crisis. Logically, this circumstance bodes well for Yoshitsu, which features directly operated physical stores under the Tokyo Lifestyle brand.

Although the narrative undergirding TKLF stock is compelling, you must also consider its financial profile, which presents a somewhat mixed bag. On the optimistic front, the growth story is certainly attractive. In the year ending Mar. 31, 2021, Yoshitsu generated revenue of $221.5 million, a robust 59% improvement against the prior-year comparison. The company also posted a lift in net income to $5.5 million from $4.9 million during that timeline.

However, prospective buyers must also recognize Yoshitsu’s cash flow. Specifically, net cash used in operating activities for fiscal year 2021 came out to a loss of $3.38 million. Though an improvement from the loss of $7.65 million during the year-ago comparison, such negative print is not sustainable over the long run. Therefore, the company must start generating more than it spends; otherwise, supporters can sour on TKLF stock.

Yoshitsu Potential

On paper, Yoshitsu seems to have its work cut out for it. Not only does the small business have to compete with multinational giants like L'Oreal (OTCMKTS: LRLCF) and Procter & Gamble Co. (NYSE: PG), an army of domestic rivals will also contest the arena.

However, Yoshitsu has a prime advantage over many western brands in that it organically speaks to its core market. As the Center for Data Innovation noted, the beauty industry consistently promotes the European standard of beauty, causing psychological harm to consumers falling outside that spectrum.

But in accordance with the “Riccobono effect,” Yoshitsu can deliver products that cater specifically to population groups in East Asia. Mathematically, the advantage is even more pronounced. East Asia represents 21.5% of the global population whereas Europe represents just under 10%. Even factoring in people of European heritage from North America, the western population amounts to under 13%.

Still, the beauty industry will depend on the global recovery from COVID-19. If people worldwide continue to stay indoors, the incentive for beauty care declines precipitously. Coincidentally, shares of L’Oreal are down 10.3% year-to-date.

How to Buy Yoshitsu IPO (TKLF) Stock

Interested investors must acquire TKLF shares at the open, necessitating knowing how to buy stocks. Below are some key pointers.

Step 1: Pick a brokerage.

Since the best brokers compete on similar financial incentives, take the time to determine which platform ideally suits your needs.

Step 2: Decide how many shares you want.

IPOs are risky, especially the nano-cap variety. Therefore, participants should choose a balanced share count.

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:

  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).

TKLF 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.

TKLF Pre-IPO

No pre-IPO access is available.

For the Community, By the Community

Though the richness of human diversity is a cause for celebration, it also presents awkward moments for beauty-care specialists, which must address a kaleidoscope of phenotypic attributes. Yoshitsu’s advantage is that it organically resonates with the lucrative East Asia population. Nevertheless, that by itself is no guarantee of success in a highly competitive arena.

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.