Restaurant Technology Group Toast Tests Consumers’ Appetite for IPO

IPO update

Restaurant technology provider Toast will test investor motivation on one of the largest lists in the United States on Wednesday, hoping that enthusiasm for new technology will negate recent jitter on the health of the economic recovery. Lead the wave of consumer-centric enterprises.

Toast symbolizes a post-pandemic rebound, the stock market hits record highs, Bright red market Initial public offering so far this year. The Boston-based company is primarily generating revenue by reducing payments processed through systems, including handheld and desktop checkout devices.

It fired or fired more than half of its staff at that height PandemicHowever, as many restaurants shifted their focus to new businesses such as home delivery, it bounced back and after the blockade, eaters rushed to eat out.

Offer price of $ 40 per share Presentation On Wednesday, the 7-year-old company was given an implicit market capitalization of $ 20 billion. This is more than double the price at which some shareholders sold their shares during the November tender offer.

Companies specializing in everything from gyms to jewelry, pasta sauces and plastic garden furniture will join the toast in the coming weeks. All of them benefit from the unexpected strength of US consumers, but they are in the public market, just as concerns about whether resilience is sustainable are beginning to grow. Have arrived at.

Many of these companies, like Toast, claim they can grow even with a slowdown in consumers.

Shoe store Allbirds Emphasizes the Internet-first business model, as opposed to the high fixed costs of traditional physical retailers, and eyewear brand Warby Parker aims to go public directly without selling new shares. I am.

Rent the Runway, a clothing rental service that applied for an IPO in July, claims to benefit from more sticky revenue on a subscription basis. And all three companies promote sustainable and responsible business practices.

Gareth McCartney, Global Co-Head of Equity Capital Markets at UBS, IPO “It was as good as we saw [it] Most of this year is “in 10 years”. But he added: .. .. There is a slightly more cautious tone that softens some of the optimism and enthusiasm we have seen. It promotes a slightly more selective approach to assets among investors. “

Weak economic data from the United States and China, the epidemic of the more infectious delta coronavirus variant, and the prospect that the central bank will soon begin unwinding its stimulus are all damaging investor confidence.

U.S. stock market on Monday Worst day of trading In the months following concerns about potential defaults for Chinese real estate developer Evergrande caused global sales.

Toast’s IPO prospectus highlights the risks posed by a more sustainable recession, the main source of revenue of which depends heavily on uncontrollable factors such as the success of customers’ restaurants and general consumer spending levels. I warned that there was.

But despite the short-term damage last year, Toast added that the pandemic would provide a long-term boost to the business by encouraging “increasing attention to the need for digital solutions.” ..

“We are confident in the predictability of the industry,” said Kent Bennett, partner of Bessemer Venture Partners and director of Toast.

Shoe maker Allbirds emphasizes Internet-first business model, as opposed to the high fixed costs of traditional physical retailers © Charlie Bibby / Financial Times

Founded by Neil Blumenthal and David Gilboa, Warby Parker will go public directly without selling new shares © FT Commission

Jeff Sloan, CEO of Global Payments, a $ 48 billion payments specialist competing with Toast in the restaurant industry, argued that this trend was more important than the Covid-19 hit.

“In the last three years, the changes in restaurant technology have been greater than in the last three decades. There is a huge tailwind. .. This is more than offsetting the impact seen in the restaurant business during the pandemic. “He said.

Sloan added: “I’m not going to dismiss the delta variant … I’m sure [Toast] Like us, I have a question about it. But he said recent payment data suggests that consumer activity is growing year-on-year, albeit at a slower rate than in early 2021.

So far this year, about 300 companies in the United States have completed their IPOs, raising $ 110 billion, according to Dealogic data. More than 700 transactions have raised approximately $ 235 billion, including the flood of special-purpose acquisition companies listed this year.

Total funding is already almost 40% higher than in 2020 as a whole, and dozens more companies are expected to go public by the end of the year.

Some observers are optimistic that recent rises in market volatility prove to be short-lived. For example, last week, JPMorgan Chase analysts said most of the concerns that made up the recent “wall of concern” have diminished.

Julian Timmer, Global Macro Director of Fidelity Investments, said: [still] Pretty flash. “

Even typical consumer goods companies, such as Israel-based indoor and outdoor furniture supplier Keter Group, who applied for an IPO this month, claim that the pandemic brought structural changes during the Covid-19. increase. According to the company, the pandemic has brought about a “transition to suburban life.”

“The market is very open-minded to consumer stories, especially those with tech overlays,” McCartney said, but warned that “the bar has risen compared to earlier this year.”

Restaurant Technology Group Toast Tests Consumers’ Appetite for IPO

Source link Restaurant Technology Group Toast Tests Consumers’ Appetite for IPO

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