Dive Brief:
- Krispy Kreme begins trading under "DNUT" on the Nasdaq Global Select Market on Thursday, offering 29 million shares of its common stock at a public offering price of $17 per share — coming in far below industry estimates.
- Krispy Kreme had previously set a $21 to $24 per share range with expectations to sell roughly 26.7 million shares and raise $640 million for a valuation of $4 billion at the top range. The company raised $500 million for a valuation of roughly $2.7 billion, and its reduced share pricing could suggest weak interest from investors.
- Krispy Kreme's return to the public market comes as several major restaurant chains mull initial public offerings. Coffee chain Dutch Bros filed for an IPO last month, and Sweetgreen did the same last week. Neither company has determined the number of shares or prices that will be offered.
Dive Insight:
Krispy Kreme's current share pricing is a far cry from the success the doughnut chain experienced after its first IPO in 2001. Just a few years after its pubic debut, the company's shares priced at $50 each. The company's first public stint lasted until 2016, when JAB Holdings bought Krispy Kreme for roughly $1.35 billion and took it private.
The chain's share price reduction comes as a bit of a surprise, as investors seem to be relatively bullish on the future of the restaurant industry despite pandemic disruption. The company is reentering the public stage at a busy time, however — at least 17 U.S. companies are scheduled to enter the market this week, according to Reuters. It's possible this flurry of new entrants is a contributing factor to its lackluster share offering.
Krispy Kreme will use the funds to pay down its $1.2 million in debt. The offering is expected to close on July 6 and is subject to the satisfaction of customary closing conditions, according to a company release.
