Krispy Kreme Comes Full Circle With Second Listing

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Krispy Kreme Comes Full Circle With Second Listing
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Krispy Kreme Inc (NASDAQ:DNUT) comes full circle with second listing and a sugar coated price

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Q1 2021 hedge fund letters, conferences and more

  • Krispy Kreme, the US doughnuts and coffeehouse chain, is set to be admitted to the NASDAQ later today.
  • This is the second public listing in its history, following an investment fund buyout in 2016.
  • It is priced at $17 a share – which is well below its expected price range.
  • It puts a value on Krispy Kreme of around $2.7 billion.
  • 29.4 million shares are expected to be issued, raising around $500 million.
  • It will trade under the ticker DNUT.
  • UK investors can buy via the secondary market once opening auction is complete.

Krispy Kreme To IPO Today

“Krispy Kreme has come full circle and is back for seconds, having previously been listed before they were bought out in 2016 – this time round, they’re planning to return a lot more dough to their private backers, even at a reduced price.

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The final IPO price has come in below the bottom end of the expected range, but it’s still a sugar-coated price tag for the doughnut maker. To justify this glossy valuation of $2.7 billion, the investment group JAB Holding Company needed to have added some Willy Wonka style magic to the company and there aren’t many signs that is the case.

There was increased appetite for sugary snacks during the pandemic, as people treated themselves during lockdowns which helped boosted revenues 23% to $322 million in the first quarter of 2021. Losses may have narrowed dramatically to $380,000 from almost $11m a year earlier but crucially they have not been eliminated, even with this sugar-fuelled rush.

Timing is everything for an IPO, and this launch comes at a time when the public is becoming more health conscious, particularly following the pandemic where obesity now appears to have been a major factor in cases of severe sickness. With sugar the new ogre, increasingly seen as a threat to long term health, the company has highlighted that it could be vulnerable to future regulation related to diet.

US IPO Market Activity

The US IPO market has seen more than a just a sprinkling of activity in recent months, and although Krispy Kreme may be hoping to strike while the fryer is hot, the IPO price is likely to be viewed by many investors as overcooked. The fact that it has come in well below the bottom of the expected range indicates that initial demand for shares was lukewarm. As with any new offering, there could well be a flurry of interest as soon as trading begins, with customers and retail investors still keen to get a bite of the action.

There’ll be no hot doughnuts for UK investors though, who will have to wait in the queue until the opening auction is complete later today – only then will they be able to get any orders in.”

Article by Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown


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Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver

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