The Original Bark Company (NYSE:BARK) is a consumer products company focused on pets’ toys, snacks, and food. The company, commonly known for its Barkbox product, has a unique subscription model. With Barkbox,  the company ships users a box of pet toys or other goods every month for a set price. It also sells some of its products in brick-and-mortar stores such as Target (NYSE:TGT).

Investors were initially very enthusiastic about BARK stock. The shares of the special purpose acquisition company (SPAC), Northern Star, with which it merged, had surged to $19 in December, nearly doubling their original price of $10.

Since then, however, the shares have traded straight down. Even though Barkbox hasn’t slashed its guidance, experienced a sudden management change, or  exhibited other commonplace red flags, BARK stock continues to tumble. In fact, the shares dropped again in recent weeks, even though the company delivered an upbeat earnings report.

So are its shareholders barking up the wrong tree? While Bark’s share price is certainly headed in the wrong direction, there’s actually a lot to like about the company.

Excellent Marketing Capabilities

Barkbox’s best trait is the efficiency of its customer acquisition efforts. Simply put, Barkbox’s user acquisition capabilities are incredible .

On average, it earns $6.60 of lifetime revenue from every dollar that it spends on acquiring customers. In general, companies which get that figure above $3 are doing a great job and should ramp up their advertising efforts. So on this metric, Barkbox is knocking the ball out of the park.

What drives Barkbox’s low customer acquisition costs? A big part of it is that Barkbox’s social media marketing is great. As Barkbox’s CEO recently pointed out, the company has more social media followers than Peloton (NASDAQ:PTON). Barkbox’s stock price, however, hasn’t followed Peloton’s lead as of yet.

Barkbox’s cost of acquiring each new user actually fell another 7% last quarter, even though its ad costs climbed. That is marketing magic.

And the revenue from its new subscribers offsets the cost of acquiring them in just four months. That’s great, assuming that the average user sticks around for 18 months, as is currently the case.

Don’t Forget the Cost of Shipping

On the negative side, however, the company’s shipping/fulfillment costs eat up much of its gross profit, making its bottom line surprisingly low. Over time, Bark intends to invest more in its fulfillment and logistics capabilities, bringing down its costs in those areas and improving its overall profitability.

Alternatively, to sharply lower those costs, Barkbox can sell itself to a larger retailer that already has  extensive logistics and distribution operations.

The gross margins of Bark’s core products are high. If it can eventually figure out the distribution issue, it should become a strong cash flow machine.

A Potential Catalyst

That said, bears can rightly point out that Barkbox has been in business for a decade now and still hasn’t solved its fulfillment issues. So there’s no guarantee that it will solve its problems anytime in the near future either.

However, it does have a potential big catalyst on the way. Specifically, Barkbox is rolling out a pet food offering, called Eats, to rival the likes of General Mills’ (NYSE:GIS) Blue Buffalo products.

If and when a substantial number of Bark’s existing customers subscribe to Eats,  the cost of each of their monthly boxes will climb from something like $30 to $70 or $80. That, in turn, would greatly reduce the percentage of its revenue that it has to spend on shipping.

Don’t Worry About Churn

In comparison to online pet giant Chewy (NYSE:CHWY) and other e-commerce companies. Barks definition of churn is more stringent. If a user pauses a subscription and later restarts it, Barkbox counts that as a churned user, whereas others in the industry do not do so.

That is actually quite important. That’s because those who are bearish on BARK stock have based much of their argument on Barkbox’s supposedly high churn number. If Bark’s churn was calculated in the same way as, say, Chewy’s, the result would look much more favorable to Bark.

Barkbox recently said that its churn would be cut in half it if used the same definition of that metric as its peers.

And it’s far cheaper to get an old customer to subscribe again than acquire a totally new customer. So Barkbox’s lapsed subscribers could be worth more than the market is giving it credit for.

The Verdict on BARK Stock

Barkbox is set to report a larger operating loss this year than last year. That’s not ideal, given that the company’s annual revenue is already above $350 million. At some point, the company needs to become more profitable. Incredibly, analysts, on average, expect Barkbox to continue to lose money through at least 2024.

That said, the company’s exceedingly good gross margins in a hot consumer category are hard to overlook. It’s easy to picture it getting acquired by a larger retailer that can cut out a lot of its unnecessary costs. And trading at just three times its revenue with an estimated annual growth rate of 30% or more, BARK stock obviously has some appeal.

The shares are currently being hurt by skepticism about SPACs. There’s also been a selloff of pet stocks this year as adoption rates have slumped after last year’s record totals. But BARK stock could reach  an attractive entry point, particularly if it continues its current downtrend in the coming weeks.

On the date of publication, Ian Bezek 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.

Ian Bezek has written more than 1,000 articles for InvestorPlace.com and Seeking Alpha. He also worked as a Junior Analyst for Kerrisdale Capital, a $300 million New York City-based hedge fund. You can reach him on Twitter at @irbezek.