sweetgreen
Investors tucked away Sweetgreen shares by the forkful on Thursday, driving the price of the salad chain's stock up more than 76% to a closing price of $49.50 per share.
The Culver City company raised $364 million in its New York Stock Exchange debut, selling 13 million shares at $28 a pop. Originally, the company had targeted a price per share of $25 at the high end.
Following the debut, the stock soared as high as $56.20 per share during regular trading, despite the company's dearth of profits.
Shortly after the IPO, Sweetgreen CEO Jonathan Neman said the company's mission is "to transform fast food and make it healthy." However, critics have called Neman's views on health fatphobic. The executive came under fire recently after claiming "no vaccine nor mask will save us" in a since-deleted LinkedIn post, which ultimately argued that what Americans should do is eat the kind of food that Sweetgreen sells.
But for a salad business, Sweetgreen also looks a lot like a tech company. Ahead of the IPO, the company described itself as a "digital platform," a "multi-channel restaurant ecosystem," and even a content creator — all phrases more evocative of Silicon Valley than a salad bar.
Trading under the symbol SG, Sweetgreen aims to double in size over the next five years. Pandemic lockdowns hammered the company last year, leading to significant layoffs at its L.A. headquarters. However, sales rebounded in the runup to the chain's IPO.The NYSE welcomes @Sweetgreen in celebration of its IPO $SGhttps://twitter.com/i/broadcasts/1YqKDqMNdlLGV\u00a0\u2026— NYSE \ud83c\udfdb (@NYSE \ud83c\udfdb) 1637245740
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Sweetgreen, the Culver City salad chain that aims to double in size over the next five years, is gearing up for its closely watched debut on the New York Stock Exchange.
Here's everything you need to know about the greens purveyor — from its founders' special shares to its dearth of profits — before trading is expected to kick off on Thursday.
Greens, Sans Profits
Despite claiming profitability in 2018 and 2019, regulatory filings indicate the 14-year-old company has posted consecutive annual losses since 2014.
With profits like these, Sweetgreen could fit at home alongside recent high-flying IPOs, including Rivian's. The Irvine-based firm recently became one of the highest-valued automakers in existence despite the glacial rollout of its debut vehicles.
A Tech Company?
Sweetgreen sells salad to white-collar workers in major cities across the U.S., but it has a more nebulous pitch for investors. The company has recently described itself as a "digital platform," a "multi-channel restaurant ecosystem," and even a content creator.
However you classify it, the fast-casual chain says its "brand, technology, and supply chain" set it apart, enabling the firm to "rapidly scale Real Food." Sweetgreen whimsically described this strategy as "a balance of art and science."
However, co-founder and CEO Jonathan Neman declared in a dot.LA interview last year that the firm "is not a tech company." Neman said, "We see ourselves as building the Starbucks of real food. We're actually not even valued like a tech company. If you look at the valuation it's much more like a high-growth food company."
Valued as High as $2.7 Billion
At the high end, Sweetgreen has its sights set on a price of $25 per share, valuing it at $2.7 billion. But even at the low end, the company's target of $23 per share is nothing to sneeze at with an implied $2.5 billion valuation. In a January funding round, the chain was valued just shy of $1.8 billion.
Raising as Much as $312.5 Million
Sweetgreen fueled its growth over the years with nearly half a billion dollars in cash from venture firms and other investors. The company will raise an additional $312.5 million if it goes on to sell 12.5 million shares at $25 a pop.
Controlled by its Founders
Co-founders Neman, Nathaniel Ru and Nicolas Jammet will collectively retain majority control of Sweetgreen after the IPO, thanks to a thing called dual-class shares.
By issuing company shares with differing voting rights, the co-founders will wield nearly 60% of the stock's total voting power. Other companies with comparable structures include Alphabet, Comcast, and Facebook.
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Dependent on office workers darting in for leafy bowls on their lunch breaks, Sweetgreen struggled when the pandemic hit and shuttered workplaces. But the company has since bounced back. It revealed Monday in a filing for an initial public offering that its revenue for the year to date, as of September 26, spiked by about 51% to $243 million from the same period last year.
The salad chain also disclosed losses of nearly $87 million to date in 2021, down from about $100 million during the same period in 2020.
In April 2020, Sweetgreen let go of 10% of its workforce at its L.A. headquarters, alienating some workers who were told about the layoffs via a pre-written script and were then locked out of their accounts. Little more than a year later, the company disclosed its plans to go public through a confidential filing.
Since then, Sweetgreen has won backing from star tennis player Naomi Osaka and its CEO Jonathan Neman has drawn ire for his now-deleted comments on the coronavirus, mask mandates and public health.
Despite the gaffe, Sweetgreen awarded its founders a "mega-grant" of company shares that is contingent on the company hitting certain stock-price milestones in the future, according to the filing. The compensation package is reminiscent of Elon Musk's arrangement with Tesla.
Founded in 2007 by three friends who wanted cheap healthy food around Georgetown University's campus, Sweetgreen has heavily depended on technology to sell their salads and streamline their supply chain. The company has 140 restaurants in 13 states, but the majority of its orders at the restaurant are made online, according to the filing.
Like other tech-dependent companies, Sweetgreen acknowledges that ad-blockers, privacy regulations and other measures that prevent consumer tracking could harm it's bottom line. Facebook on Monday saw its shares fall after Apple's new privacy rules hit tech companies.
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