Contributor, Benzinga
October 21, 2021
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When life gives you lemons, make lemonade. A common exhortation to not only view circumstances on the brighter side of life, it’s also an active gameplan. Rather than being merely passive observers of impactful events, the adage encourages ingenuity, turning what mere mortals would regard as an insurmountable headwind into a positive catalyst for change.

Such a never-say-die attitude was arguably no more present than in companies tied to the food-and-beverage services sector. When the COVID-19 pandemic transitioned from an exotic problem in a far off land to an everyday reality on Main Street, USA, among the worst-hit industries were restaurants, bars and nightclubs. Seemingly overnight, government mandates and rising public fears coalesced into a seismic drop in economic activities.

At that point, wine producer and distributor Winc could have thrown in the towel. With non-essential establishments shuttered across the nation, a key revenue channel for the company — which was building its brand presence through its expanding list of wholesale partners — was temporarily eliminated.

However, management shifted its focus on its direct-to-consumer (D2C) membership services, resulting in booming sales. And now, it’s on the cusp of an initial public offering (IPO).

When is the Winc IPO Date?

Though not the flashiest public market debut, Winc has generated significant attention thanks to the relevance of the underlying business. According to data compiled by Statista.com, D2C e-commerce sales reached $115 billion last year. Further, by the end of this year, experts project that D2C online sales will surpass $129 billion.

Within that broader total, wine and spirits sales enjoyed a substantial boost in sales. Because the global health crisis forced non-essential retailers to close their doors, demand for alcoholic beverages soared. Cynically, millions of Americans needed a respite from the daily stresses of the new normal, and companies like Winc were in a position to oblige.

On Oct. 21, 2021, Winc will make its debut on the IPO calendar amid a flurry of public market launches, including the much-anticipated introduction of WeWork (NYSE: WE). While the hectic scheduling involving other IPOs shouldn’t take away from Winc’s fundamental strongpoints, it’s something to consider as a possible near-term obstacle. Shares will trade on the New York Stock Exchange under the ticker symbol WBEV.

Earlier on Sept. 27, Winc updated its IPO prospectus with the U.S. Securities and Exchange Commission (SEC). In the document, the company disclosed that it intended to raise up to $75 million. Management originally filed its prospectus confidentially on July 2 of this year. Under the terms of the deal, Winc will distribute 5 million shares priced between $14 and $16.

At the highest end of the estimated spectrum, the company will raise $80 million, which would likely see it command a valuation of $263 million. Bank of America (NYSE: BAC) and Canaccord Genuity (OTCMKTS: CCORF) serve as underwriters on the deal.

For those who are interested in acquiring WBEV stock at the open, you may want to consider the trading dynamics for Duckhorn Portfolio Inc. (NYSE: NAPA), a producer of several exquisite fine wines, which debuted in the NYSE in March of this year. Though NAPA shares carried significant returns into mid-June, they’ve entered a sideways consolidation channel.

True, WBEV stock is tied to its own unique business. Nevertheless, it’s worthwhile to assess the competition before pouring out your hard-earned dollars.

Winc Financial History

Because the investment market is forward-looking in nature, the financial prospects for WBEV stock involve an aeration between the underlying company’s total addressable market (TAM) and its likelihood of future sustainability.

Regarding the former, Winc found itself in a rather enviable position. Although the COVID-19 pandemic rudely shuttered the company’s brand-building initiatives via its brick-and-mortar wholesale partners, the crisis simultaneously opened another door, this one leading to a burgeoning D2C market that would later enjoy a firestorm of demand.

On balance, the broader U.S. wine market commanded a valuation of $88 billion in 2020. Globally, the wine industry reached a value of $326.6 billion, with insiders projecting total revenues to hit $434.6 billion by 2027. Should society continue to recover from the COVID-19 crisis, Winc could fire on all cylinders, thereby expanding its footprint.

For now, the company will focus on the D2C market, which is absolutely no slouch. According to information cited by Wine Industry Network, “U.S. wineries shipped more than $3.7 billion worth of wine directly to consumers in 2020.” Given the possibility that behaviors during the lockdowns could stick beyond the scope of the pandemic, WBEV stock facilitates an enticing deal.

Nevertheless, no investment is without risk — and that goes multifold for IPOs. Regarding the wine industry, Wine Industry Network noted that “the record 8.39 million cases of wine shipped to consumers in 2020 – representing a 27% increase over 2019 – came at the cost of lower growth in value for the channel, which comparatively was up only 14.9% over 2019’s $3.2 billion in sales.” Specifically, consumers turned to lower-cost varietals — wine made primarily from a single named grape variety.

As for Winc’s financials, the winemaker posted revenue of $64.7 million in 2020, up 77.5% from 2019’s tally of $36.4 million. During the 6 months ending June 30, 2021, the company generated revenue of $35.1 million, up over 20% from the year-ago comparison.

Though both sales hauls are encouraging, investors will want to consider the company’s operating losses. Despite improved sales last year, Winc lost $6.4 million from operations, though it was an improvement over the $7.1 million lost in 2019.

What’s particularly concerning in the half-year period of 2021 is that operating losses jumped to $4 million from $3 million in the same timeframe in 2020. Thus, prospective buyers of WINC stock must hope that sales channels open back up in 2022.

Winc Potential

Despite the complicated and nuanced financial undertones for WBEV stock, regarding the upside potential for the issuing company, the banner headline couldn’t be clear enough: millennials love their wine.

Per an op-ed from The Washington Post, “Generally speaking, millennials think of wine as a social drink, a connector that is meant to be shared. They look at wine as entertaining and engaging.” Therefore, concerns that beer and hard seltzer brands are dominating millennial palates may be overdone as young people assert that wine has a prime place in their social functions.

Also, folks who want to speculate on WBEV stock have hard numbers and reality on their side as it pertains to millennials. Per the Pew Research Center, this demographic represents the largest generation in the U.S. labor force, which means that whatever they want, business must deliver — or risk going out of business altogether.

That said, investors should not throw caution to the wind when assessing WBEV stock. Namely, nobody knows whether the behaviors that people adopted during this crisis will be sustained. In other words, what was a booming market subsegment during the pandemic could be rendered a laggard post-crisis.

Still, you should note that consultancy firm McKinsey & Company recognizes the possibility that the COVID-19 landscape may have “fundamentally altered the behavior of numerous U.S. consumers.” Whether that translates positively to WBEV stock or not is the opportunity and the risk.

How to Buy Winc IPO (WBEV) Stock

If you’re interested in acquiring WBEV stock at the open, the process is straightforward, especially if you know how to buy stocks. If you don’t, follow the simple steps below.

Step 1: Pick a brokerage.

Since any reputable brokerage will allow you to buy WBEV stock at the open, you should narrow your list of best brokers to services that provide you access to various alternative opportunities.

Step 2: Decide how many shares you want.

Ultimately, an IPO is a shot in the dark. To mitigate downside risk, it’s best to choose a balanced share count.

Step 3: Choose your order type.

Before placing your bet, memorize 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).

WBEV Restrictions for Retail Investors

Before engaging in an IPO, review the Financial Industry Regulatory Authority (FINRA) rules on restricted persons. Quick tip: if you have privileged information, don’t participate.

WBEV Pre-IPO

In traditional IPOs, underwriters buy new issues of a public-market-seeking enterprise for distribution to their clients, typically institutional investors. However, companies like ClickIPO democratize this process by distributing shares at their initial offering price (pre-IPO) to regular retail investors.

A Full-Bodied IPO

With the pandemic forcing consumers to get their wine fix through online channels, Winc benefitted from a once-in-a-blue-moon organic marketing opportunity. Nevertheless, pre-COVID retail channels must open up soon to avoid WBEV stock turning sour.

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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.