The stock market is seeing a steady rise in the number of companies aspiring to go public, with the SEC relaxing the listing norms and new trends like direct-listing making the process easier. Last year was surprisingly busy For the IPO market, despite the COVID-related headwinds, and the trend continued in 2021 so far.
COVID Winner
While technology companies maintain their dominance, others like specialty apparel maker Figs, Inc. are also flocking to Wall Street. Figs’ stock market debut is expected to elicit significant investor interest for being the first IPO that is accessible to retail investors. Buoyed by the spike in the demand for face masks and personal protective equipment during the pandemic, the Figs management has laid down a strategy to take growth to the next level.
After defying pandemic, IPO market is bracing for another busy year
The California-based firm that owns popular medical uniform brand Scrubs is expected to be valued slightly above $3 billion after it goes public this week. In an SEC filing submitted earlier this month, the company revealed its intention to have listed in the New York Stock Exchange under ticker symbol FIGS. It will offer around 5.9 million shares at $16-$19 apiece, to raise around $92 million excluding underwriting commissions and offering expenses. The group of underwriters managing the offering is led by Morgan Stanley and Goldman Sachs.
DTC Model
Established by Heather Hasson and Trina Spear in 2013, Figs started as a direct-to-customer retailer mainly selling medical scrubs. The founders, who have served as the company’s CEOs since then, had set a new trend in medical apparel through their innovative designs. That played a key role in the transition from conventional healthcare apparel — often considered scratchy due to the hard materials used in them and boxy design — to today’s comfortable and easy-to-wear clothing. The refined and high-performing outfits reduce the strain on healthcare professionals who work for long hours.
The company had to increase production capacity to meet the jump in demand after the virus outbreak, with more and more healthcare professionals joining COVID care and hospitals placing bulk orders for personal protection items. The direct-to-customer model has helped the company expand its client base steadily and achieve unusually strong growth. The uptrend should continue in the coming months, given the growing importance of safety measures in the healthcare industry. It is estimated that the total addressable market of the healthcare apparel industry is $12 billion in the U.S and $79 billion globally.
Customers Double
Figs had around 1.3 million active customers at the end of 2020, which is more than double the size of the client base it had a year earlier. The growth translated into a sharp increase in revenues to $263.1 million – the combined average top-line growth is around $150%. Consequently, the company turned to a profit of $58 million from a loss in fiscal 2019.
Read management/analysts’ comments on quarterly reports
In a first, retail investors will get access to Figs’ IPO shares, thanks to stock trading platform Robinhood Markets that rolled out the facility that enables amateur investors to trade in newly listed shares. It is considered a game-changing move that would contribute to democratizing stock trading.