Donut Roller Coaster: Krispy Kreme Shares After Small IPO

Donut Roller Coaster: Krispy Kreme Shares After Small IPO

Shares of Krispy Kreme Inc soared on their first day of trading, giving the donut chain a much needed boost a day after being forced to cut its initial public offering.
The stock reversed an early decline to jump 26% to $ 20.58 a share Thursday in New York. The Charlotte, North Carolina-based company, which is owned by investment firm JAB Holdings BV, opened at $ 16.30, below the IPO price of $ 17.

The roller coaster debut reflects the volatile restaurant environment as the pandemic abates. Many American restaurants, especially those focused on breakfast, have faced a difficult period of store closings and reduced sales as Covid-19 has led Americans to eat more at home.

Krispy Kreme CEO Michael Tattersfield downplayed the stock’s initial performance, saying he focused more on the investor base than the stock price.

“The way I measure it is a little different – when you look at who the quality of investor is that you brought into your IPO,” he said in an interview. He said Krispy Kreme has attracted long-term holders, including sovereign wealth funds.

More than $ 20 billion in IPOs began trading in the United States this week, one of the largest weeks on record. Didi Global Inc., a Chinese rideshare company, began trading on Wednesday after raising $ 4.4 billion in the second-largest Chinese listing in the United States on record.

On Wednesday, Krispy Kreme raised $ 500 million during its IPO, below the $ 640 million he had asked for. The company initially marketed the shares for between $ 21 and $ 24, according to a quotation document filed with the U.S. Securities and Exchange Commission.

Shares rose 22% to $ 19.89 as of 3:07 p.m., giving the company a market value of around $ 3.2 billion, according to Bloomberg calculations.

International expansion

Krispy Kreme aims to add 1,000 outlets each year, including stores, grocery cabinets and convenience store spaces, Tattersfield said.

The company sees “significant” room for growth in the US and internationally, the CEO said on Bloomberg Television. Brazil, China and Western Europe are under consideration for growth.

“There are over 150 countries in which we are not,” he said. “So it’s not about putting a flag in another country. It’s the discipline to do it right.

JAB acquired Krispy Kreme in 2016 as part of a $ 1.35 billion deal to privatize it. JAB, an investment vehicle for the Reimanns, one of Germany’s wealthiest families, has aggressively grown into restaurants and beverages and controls Pret A Manger and JDE Peet’s.

Krispy Kreme has grown into e-commerce, a service that has performed well during pandemic lockdowns. This part of the business now accounts for nearly a fifth of sales in the United States, fueled by its Insomnia Cookies delivery concept.

Donuts Cadeaux

Tattersfield said the company was not just competing with other restaurants or confectionery manufacturers.

“You are sometimes in competition with the flower business. On Mother’s Day, children sometimes prefer to give their mother donuts, ”he said. “It’s a very different business model that is not necessarily competitive only in the food industry.”

Krispy Kreme’s offer was led by JPMorgan Chase & Co., Morgan Stanley, Bank of America Corp. and Citigroup Inc. The shares trade on the Nasdaq Global Select Market under the symbol DNUT.


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