Well, it went off today---yes, Albertsons IPO…5 years in the making! Let’s go over
the details of what happened, what it means for you and when you can start investing!
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Alright to let’s dig into the Albertsons Companies IPO…today it actually happened
after 2 previous attempts got nixed. And reports are that this one itself risked getting cancelled
at the last minute. Before we get further into it, we’ve prepared for this IPO in
2 previous videos…if you haven’t seen those videos yet, definitely check them out
as it will help you get a better grasp on if investing in the company makes sense for
you. So today, the IPO did not go off exactly as
planned. We had a good idea it was going to happen today, but apparently there were some
tensions with the current private equity owners and the underwriters that put the entire offering
at risk. While it ultimately went off, it did get scaled down as 50 million shares were
sold vs. the 65.8 million shares that were planned to sell. But that was only one thing
that got scaled back as the share price ended up being $16 which was lower than the estimated
price within the $18 to 20 dollar range. So what does this mean? Well, my initial thoughts
are that some of things we talked about in the other videos probably linger in investors’
minds…that being of the competitive nature of the grocery industry and its tight operating
margins. Another thing out there is the question of how sales could be impacted as the country
is reopening…already Krogers, the only grocery store company bigger than Albertsons is already
reporting less demand in essential items as restrictions are easing. But the big elephant
in the room is the debt that Albertsons is carrying---and that’s probably what spooks
investors the most, even though Albertsons has improved its operating efficiencies over
the past couple of years. Right now, Albertsons is carrying about 8 and a half billion dollars
in debt, which is actually down from about 12 billion dollars…so yeah, it literally
is an elephant weighing the company down at this point. A couple of other things to keep
in mind is that none of proceeds are going to the company, but purely to reimburse the
private equity firm owners and that the way that the IPO was structured, no matter what
happened, the current owners will maintain the power in the company which limits shareholder
influence. I have to think that these were the combination of factors that resulted in
the underperformance of the initial public offering.
So what does that mean for you? Well, if you’ve been considering investing in the company,
it could be a glass half full situation if the shares end up trading for less than you
expected or it could also be a glass half empty situation if now the lackluster IPO
has left you questioning what the shares are actually worth. As I’ve mentioned before,
I’m not a financial advisor providing you any advice to act on. What I try to do is
share all of the information that I consider when making an investment decision. While
I think there is an opportunity for the business to grow, I do see the factors that contributed
to the IPO underperforming. Now if you do decide to invest, you can start tomorrow as
Albertsons will trade under the ACI ticker symbol on the New York Stock Exchange. Keep
in mind that just because the IPO valued the shares at $16 dollars, the actually trading
price could vary by the time trading commences. As I continue to consider the results of the
IPO, the current environment, and how I see the market values the stock, I’ll share
any more information or thoughts that I come up with.
I’ve talked enough…so what are YOUR thoughts on Albertsons? Please let me know in the comments.
And again, if you enjoyed this video, please hit that Like button. As always, I hope that
we can all learn from each other on how to take little, easy steps in making big improvements
in our lives. Thank you again for watching and until next time, have a great day!