Many years ago, a rock band called The Buggles performed a quirky song entitled “Video Killed the Radio Star.” Released in 1979, the musical work would eventually become both iconic and ironic, in part a criticism of the artificial nature of society. As well, it pointed to the disruptive ethos of technology, with modern streaming platforms and on-demand entertainment eventually impinging upon the relevance of the formerly omnipotent record label.
In the same vein, a contemporary band could very well release a tune called “Digital Killed the Promo Advertiser.” While companies still market their products and services to consumers across the world, their favored medium has rapidly transitioned from print, radio and television spots to the internet and social media. According to data compiled by Statista.com, “the internet was considered the most important medium for advertisers, accounting for 51 percent of total media ad spend in 2020.”
In other words, if you’re not hawking your products online, you’re barking up the wrong tree. On a surface level, then, the initial public offering (IPO) of Stran & Company, Inc., which specializes in physical advertising mechanisms, seems odd. But dig a little deeper to find out why you shouldn’t judge a book by its cover.
When Is the Stran & Company IPO Date?
One of the smaller public market debuts to ink its way onto the IPO calendar for the week beginning Nov. 8, a temptation emanates within the investment community to overlook Stran & Company. After all, business in the modern era takes place on the internet. That being the case, an advertising firm levered to the promotional products industry appears anachronistic.
To be fair, such assumptions are not without a modicum of justification. As the biggest example, the integration of e-commerce within the broader retail ecosystem has been steadily increasing since the late 1990s, according to the U.S. Census Bureau. Of course, the COVID-19 pandemic only accelerated this trend, albeit in the cruelest cynical manner as consumers shifted their behaviors as a matter of safety.
Still, no matter how advanced society gets, digital advertising features multiple points of failure, many of which neither paying clients nor marketing strategists can control. For instance, internet users could block adverts or use virtual private networks (VPNs) to disguise their digital footprint, rendering online pitches ineffective.
Plus, a blackout or internet service disruption could eliminate any possibility of consumer engagement. But it’s hard to block or ignore a promotional shirt or writing instrument, thus giving Stran & Company a surprising advantage amid the electronic onslaught. Thus, the firm’s IPO — which goes live on Nov. 9 — should not be readily dismissed.
No, it’s not the biggest offering you’ll see this month. In late October, Stran disclosed that it will distribute 3.33 million shares at a price range between $4 and $5 per unit. Later, on Nov. 8, management announced an upsizing to the deal, offering 4.34 million shares at an initial offering price of $4.15 per unit. This translates to aggregate gross proceeds of $18 million.
Shares will trade on the Nasdaq exchange under the ticker symbol STRN. EF Hutton represents the lead bookrunner for the deal, while US Tiger Securities, Inc. provides joint bookrunning management services.
Stran & Company Financial History
Given the influence of connectivity technologies, it’s difficult to imagine the upside potential of STRN stock. Per the Statista data, digital advertising spending increased globally to $378.16 billion in 2020. Despite the pandemic and initial expectations of sector decline, this revenue tally represented a nearly 13% lift from 2019 sales.
On the other hand, promotional products did not enjoy a favorable backdrop. With government agencies cracking down on non-essential activities, analysts had dim financial growth prospects for physical advertising impressions. Only now with the reopening of the U.S. and the rest of the world do physical-medium advertising mechanisms have a chance.
In the meantime, digital advertising has never stopped, which seems to bode poorly for STRN stock. But that’s not the most accurate way of assessing this industry subsegment. According to information from a 2016 Advertising Specialty Institute report, promotional products providers offer the following advantages to their enterprise-level clients:
- Coverage: 50% of U.S. consumers own promotional writing instruments and 58% own commercialized shirts. Further, half of consumers own promotional bags while 41% own corporate-branded desk and office accessories. Not only do Americans own several promotional items, they represent always-on engagement, even during a complete power blackout.
- Cost: It might not seem like it at first, but physical products can be incredibly cost effective. For writing instruments, the cost per impression amounts to only one-tenth of a cent. You’re just not going to get that magnitude of cost-effectiveness from a digital source.
- Concentration: Different demographics desire different things, and smart organizations like Stran & Company can modify their product portfolio to concentrate on and convert specific audiences. For instance, millennials overwhelmingly favor logoed desk accessories.
Although the contrarian narrative for STRN stock is appealing in light of the facts, investors will need to tread carefully with Stran specifically. Primarily, the company posted sales of $16.1 million in the first 6 months of 2021. However, this tally represents a 20% loss from the same comparison in the prior year, which raises eyebrows.
On a positive note, the pandemic forced people to stay indoors for an extended time. Naturally, cabin fever is getting the best out of consumers, driving them outdoors and in turn, leading to greater opportunities for impressions.
Stran & Company Potential
As with any IPO, you’ll want to take a measured approach. Even the offerings that are interwoven with high-potential businesses may stumble out of the gates for a variety of reasons — some of which may not even have to do with the company itself. However, STRN stock features intriguing storylines that investors may want to consider after careful due diligence.
Mainly, the U.S. consumer economy is counterintuitively strong, at least according to an insightful article from The Wall Street Journal. Citing information provided by the Federal Reserve, “U.S. households added $13.5 trillion in wealth last year,” representing the “biggest increase in records going back 3 decades.”
Backing up this remarkable finding, a Bloomberg report indicated that the U.S. stock of pandemic savings hasn’t shrunk, indicating that the COVID bonanza — if you want to call it that — is still coiled like a rattlesnake, waiting for consumer confidence to rise before striking. This dynamic implies that Stran’s services will be extremely relevant as businesses look to recoup the lost growth opportunities of 2020.
Still, every coin has a flipside and the advertising market — whether physical or digital — is no different. Another article from The Wall Street Journal warned investors that corporate debt crossed above $11 trillion this year, which may mean that embattled companies have only succeeded in delaying the inevitable fiscal reckoning.
If anything, many businesses are incentivized to cut costs wherever possible, which could negatively impact the advertising business.
How to Buy Stran & Company IPO (STRN) Stock
With Stran set to launch soon, anyone interested in the opportunity must acquire shares at the open, which is a straightforward process if you know how to buy stocks. If not, just follow the steps below.
Step 1: Pick a brokerage.
With the advent of internet technology and rising competition, you’ll find that most brokerages compete on similar financial incentives. Therefore, narrow your list of best brokers to platforms that suit your investing style.
Step 2: Decide how many shares you want.
IPOs are risky because you’re venturing into the unknown. You can mitigate the downside threat by electing a balanced share count.
Step 3: Choose your order type.
Before trading, understand 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).
STRN Restrictions for Retail Investors
Review the Financial Industry Regulatory Authority (FINRA) rules on restricted persons before participating. Avoid running afoul of the U.S. Securities and Exchange Commission (SEC) by making sure you don’t invest in opportunities in which you have privileged (non-public) information.
Usually, IPO underwriters sell new issues at their initial offering price only to institutional players, boxing out regular retail investors. To remedy this circumstance, companies like ClickIPO offer pre-IPO access to their members for select opportunities, leveling the playing field.
The Lasting First Impression
While digital advertising has dominated consumer outreach initiatives, they’re not without vulnerabilities. Primarily, they can be less cost-effective due to their transient nature. In contrast, promotional products can stay with prospects for years, making the IPO of STRN stock a counterintuitively intriguing one.
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.