DNUT Stock: Why Some Redditors Are Betting Against the Krispy Kreme IPO

A range of high-profile initial public offerings have hit the market of late. For investors, the newest addition to that list is quite yummy, and it is Krispy Kreme (NASDAQ:DNUT). Today, DNUT stock is seeing gains of more than 17%.

A close-up of a sign for Krispy Kreme (DNUT) donuts.

Source: James R. Martin / Shutterstock.com

As fellow InvestorPlace contributor Robert Lakin recently pointed out, DNUT stock priced at $17, well below the $21-$24 range. That said, as we speak, DNUT stock is steadily climbing toward the bottom end of that range.

This week has seen a number of IPOs take hold, with mixed results. Indeed, Krispy Kreme’s retail-focused business model is intriguing to investors seeking a pandemic reopening play. Last year, the company lost $61 million on approximately $1.1 billion in sales. Thus, investors hopeful for a rebound in activity this coming year may be interested in this stock from a value perspective.

However, some retail investors don’t seem so enthused about DNUT stock. Let’s dive into what the criticisms are, and why it appears they aren’t jumping aboard this donut train.

DNUT Stock Seeing Buying On Opening Day

Looking at DNUT stock discussion on the retail investor boards, it’s hard to find highly bullish speculators. In fact, much of the discussion around this stock is downright bearish.

Some Redditors point out the fact that the company’s current valuation of roughly $2.7 billion is markedly higher than the valuation Krispy Kreme got taken private at in 2016. Now, a lot has changed since then. And there’s likely good reason Krispy Kreme is choosing to go public now. Equity markets are red-hot, and management teams are creating value for shareholders by issuing shares in this market.

However, it’s worth noting that Krispy Kreme isn’t yet profitable. Pandemic aside, this is a stock that perhaps doesn’t look as juicy as many other de-SPAC companies retail investors are used to piling into. Indeed, it’s not a hypergrowth stock, by any means.

Whether or not Krispy Kreme’s brand inspires a wave of retail interest in DNUT stock remains to be seen. However, this is a stock that will go on my watch list for now.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Article printed from InvestorPlace Media, https://investorplace.com/2021/07/dnut-stock-why-some-redditors-are-betting-against-the-krispy-kreme-ipo/.

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