Is Recent IPO Vita Coco a Good Stock to Buy?

The Vita Coco Company, Inc. (COCO), which is headquartered in New York City, is a healthy beverage producer known for its coconut water drinks. Founded in 2004, COCO’s popular brands include Vita Coco, Runa, and Ever & Ever. The company is a…

leading player in the premium lifestyle drink industry, operating in 24 countries worldwide. It controls 46% of the market share in the United States and more than 70% of the market share in the United Kingdom.

COCO made its stock market debut through a traditional IPO on October 21, 2021, by listing 11.50 million shares on the Nasdaq Stock Exchange. The stock made a lukewarm market debut, opening just 2.5% above its initial price of $15.

But the shares COCO slumped 1.7% intraday to close its first trading session at $13.52. The stock has since gained 12.6% in price.

Here is what could influence COCO’s performance in the near term:

Growing Popularity

Vita Coco’s premium lifestyle products are a big hit among the Millennial and Gen Z consumers, with 43% of its customers belonging to these generations. The company recently launched Vita Coco Pressed, which represents more than 8% of the coconut water category. According to IRI Custom Research, COCO is the third-largest standalone brand in this category and is the second-fastest-growing brand among its peers.

Impressive Growth Story

For the trailing 12 months ended June 30, 2021, COCO’s net sales grew 17% year-over-year to $334 million. Its retail sales for the coconut water category grew 29% year-over-year over the 13 weeks ended September 5, 2021. Its net income for the six months ended June 2021 rose 43% from the same period last year to $9 million.

However, the company’s adjusted EBITDA fell 16% from the prior-year period to $16 million for the six months ended June 30, 2021, due primarily to supply chain headwinds.

Intense Competition

The rising demand for healthy, calorie-free alternatives to energy drinks and refreshing beverages has fueled COCO’s growth over the past few years. However…

 

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