Dutch Bros (NYSE: BROS) started as a pushcart coffee vendor that has expanded with hundreds of drive-through locations on the West Coast. The company's string of success continued with its recent IPO that saw share prices surging 50% on its first day of trading. Since then, shares have continued to trend higher.
Company Background
Dutch Brothers was founded in 1992 by two brothers of Danish descent - Dane and Travis Boersma in Grants Pass, Oregon. Travis Boersma continues to have a 41% stake in the company which made him a billionaire following the IPO.
The brothers had a family dairy farm and started selling coffee around town on a pushcart. By 2018, they had more than 300 locations with the majority of them drive-throughs. The company has also started expanding into other regions like Texas and Oklahoma. However, Dane Boersma passed away at an early age due to ALS.
IPO Details
Prior to its open, Dutch Bros was trading at $23, so it had an impressive first-day of trading with a close of $36.8 and a high of $40.2. Since then, shares have continued to trend higher.
The company was able to raise $484 million. In 2020, the company had $5.7 million in net income, and $327.4 million of revenue. In Q2 of this year, it had $114 million in revenue, a 51% YoY increase. Net income was $2.92 million a 11% gain.
Each location had average revenue of $1.7 million with same-store sales growing 2% over the past year. The company also encountered some challenges with the wildfires in that part of the country.
Stock Price Outlook
There is a lot to like about Dutch Bros including that coffee is a very profitable business and the company has many potential avenues for growth. Of course, Starbucks (NYSE: SBUX) is one of the best-performing stocks of all time and Dutch Bros has a lot in common.
The recent market environment is also favorable for the stock as a risk-on mood seems to have struck with outperformance in IPOs and speculative stocks catching a bid. Additionally, market history tells us that if a company can expand and consistently add locations then its stock price tends to do well.