The Comfiest IPO this quarter

Grab a blanket, some hot pockets, and turn on some $NFLX because you can now get comfy and cozy with Lovesac ($LOVE)

They are known for massivly oversized furniture that can only be described as a “planet sized hug from a blanket” and can be seen in countless memes and youtube videos.

The parent company of all of this soft and modular furniture, is LOVESAC, and is looking to price its IPO at roughly $16 per share, a  premium to its pre-IPO shopped price range of $13-$15 per share. The company is also deciding to offer 3.3 million shares vs the proposed 3 million shares. Trading is set to begin 6/27/18, and will be traded on the NASDAQ. With a proposed capital raise of $52.8 million, you could buy over 50,000 Lovesac SuperSacs. (Didn’t think you would read Super Sac today did you?)

$LOVE will face some heavy competition though, as they sell direct to consumers in higher end malls and online, and furniture retailers like Ashley Furniture, IKEA, Havertys ($HVT), Costco ($COST), JC Penny ($JCP), and even Amazon ($AMZN) could either stop selling, create a private label version, or show comparable furniture above Lovesac.

It is worth noting the incredible margins in furniture though, as Warren Buffets Berkshire Hathaway is the owner of RC Willey, and an absolute powerhouse in the furniture market. Buffet doesn’t do bad industries.

How you make money:

IPO’s are generally incredibly hard to get into in the primary market, and once shares hit the secondary market, you are at the market whims. IPO’s also generally tend to have quite a bit of volatility. If you read the S1, and feel confident, then if there is a dip in share price right out of the gate, consider the stock on sale, and go long. If you don’t like the company, or just don’t ever want to report having a “sac of shares” you could short the stock without every buying it by selling PUT options.

Not familiar with Put Options? Take a peek at Wall Street Survivor courses to learn the difference between Calls and Puts, and how you can make money on a stock without ever owning a share.

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