BarkBox Owner BARK Bringing Dog-Focused Sales Platform Public Via SPAC

Chris Katje
·3 min read

A SPAC from New York Islanders owner Jon Ledecky and former Hearst Magazines and Cosmopolitan executive Joanna Coles is bringing BarkBox owner BARK public.

The SPAC Deal: BARK is going public via SPAC Northern Star Acquisition Corp (NYSE:STIC.U). This is a fast deal in the SPAC world since the company is still trading as units and has not split into common shares and warrants. The SPAC deal values the company at an enterprise value of $1.6 billion.

SPAC units are expected to split around Dec. 18. Current SPAC shareholders are expected to own 12.6% of the new company. Each unit includes one-third of a warrant and one common share.

The deal is expected to close in the second quarter of 2021 with the new company trading under the symbol BARK on the NYSE.

About BARK: The company serves over one million dogs monthly. BARK uses an omnichannel sales strategy with its BarkBox subscription program and large retail partnerships for proprietary products. The company said it's well-positioned to be the category leader in fun, food, home and health.

Retail partnerships include Amazozn.com (NASDAQ: AMZN), Target Corporation (NYSE: TGT), Petco, PetSmart and Costco Wholesale Corporation (NASDAQ: COST). The company’s products are found in over 23,000 stores with these partnerships.

Growth: The pet industry was worth $96 billion in 2019 and is expected to grow. The dog category sees $4.3 billion in annual sales on Amazon.

BarkBox has seen rapid growth for its monthly subscription offering. This sales model saw 618,000 and 663,000 customers for fiscal 2019 and fiscal 2020, respectively. In fiscal 2021, BarkBox monthly subscribers totaled 1.05 million.

BarkBox has over 6.5 million customers.

Bark Home was launched in 2019, while Bark Eats and Bark Bright were launched in 2020. These products could offer additional growth with the dog food market worth $24.7 billion in 2020 and the growth of pet insurance offerings putting a focus on health and wellness of pets.

The company is focused on cross selling through its add to box segment with BarkBox. Add to box revenue was $2.3 million and $3 million in the first two quarters of fiscal 2021 before jumping to $6.1 million in the third quarter.

Financials: Fiscal 2021 revenue is estimated to be $365 million. Gross margins for the year are expected to be around 60%. Revenue for fiscal 2021 is expected to grow 65% year-over-year including 179% growth for new products.

Expected revenue totals are $516 million and $706 million for fiscal 2022 and fiscal 2023, respectively.

Customer acquisition costs are dropping, which could help the company’s bottom line as well.

Competitors: The SPAC deal values BARK at 3.5x estimated 2021 revenue. That compares to multiples of 4.4x for Chewy Inc (NYSE: CHWY), 13.5x for Freshpet Inc (NASDAQ: FRPT) and 6.5x for Trupanion Inc (NASDAQ: TRUP).

All three competitors have seen their share prices rise over 100% in 2020. Chewy leads the way with a 224% year-to-date increase in share value.

Price Action: Northern Star SPAC units are up 27% to $13.17.

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