Kidpik Corp. (PIK) in New York City made its market debut on Nov. 11, 2021. It operates as a subscription-based e-commerce firm that provides clothing, footwear, and accessories for girls and boys. The company's NASDAQ debut was promising. The company sold approximately 2.1 million shares of common stock at $8.50 per share, raising approximately $18 million in gross revenues. The IPO was greater than PIK's previously stated plans to issue around 1.7 million shares at a price range of $8 to $10.
PIK’s shares are up 72.3% in price over the past month on the back of the company’s collaboration with Walt Disney Co. (DIS) to release several boxes inspired by the forthcoming film "Cheaper by the Dozen."
However, the stock has slumped 17.5% year-to-date to close yesterday's trading session at $5.17.
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Here is what could shape PIK's performance in the near term:
Poor Bottom line Performance
PIK's net revenue increased 20.3% year-over-year to $5.57 million for the three months ended Oct. 2, 2021. However, its operating loss increased 64% from its year-ago value to $1.40 million. Its net loss grew 21.6% from the prior-year quarter to $1.19 million, while its loss per share came in at $0.22 over this period. In addition, its net cash used in operating activities was $5.64 million, representing a 136% increase for the 12 months ended Oct. 02, 2021.
Poor Profitability
PIK's 0.02% trailing-12-months CAPEX/Sales multiple is 99.4% lower than the 2.6% industry average. Its trailing-12-months cash from operations stood at a negative $6.80 million compared to the $163.29 million industry average. Also, its trailing-12-months ROA, net income margin and ROC are negative 51.5%, 24%, and 42.8%, respectively.
POWR Ratings Reflect Uncertainty
PIK has an overall D rating, which equates to Sell in our proprietary POWR Ratings system. The POWR ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight distinct categories. PIK has a D grade Quality. The company's poor profitability and financials are consistent with the Quality grade.
Of the 72 stocks in the F-rated Internet industry, PIK is ranked #59.
Beyond what I have stated above, one can view PIK ratings for Stability, Momentum, Growth, Value, and Sentiment here.
Bottom Line
While the company's recent strategic collaboration with DIS has garnered significant investor attention and caused the stock to skyrocket in price, as the hype behind the film dies down, investors could become concerned about PIK's long-term prospects based on its poor fundamental performance. In addition, analysts expect its EPS to remain negative in fiscal 2021 and 2022. Therefore, we believe the stock is best avoided now.
How Does Kidpik Corp. (PIK) Stack Up Against its Peers?
While PIK has an overall D rating, one might want to consider its industry peers, trivago N.V. (TRVG), which has an overall A (Strong Buy) rating, and Yelp Inc. (YELP) and Travelzoo (TZOO), which have an overall B (Buy) rating.
Note that TRVG is one of the few stocks handpicked by our Chief Growth Strategist, Jaimini Desai, currently in the POWR Stocks Under $10 portfolio. Learn more here.
PIK shares fell $0.19 (-3.68%) in premarket trading Wednesday. Year-to-date, PIK has declined -17.54%, versus a -5.05% rise in the benchmark S&P 500 index during the same period.
About the Author: Pragya Pandey
Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate.
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