Amplify Snack Brands’ shares failed to blast higher on their first day of trading Wednesday, a slow start that bucks the trend of strong first-day performances for consumer food IPOs.
Amplify Snack’s shares, which trade under the symbol BETR, were down more than 8% at $16.55 apiece in recent afternoon trading on Wednesday, giving the company a market value of about $1.24 billion. Over the past five years, consumer food initial public offerings have recorded an average first day gain of 22%, according to IPO ETF manager Renaissance Capital.
Founded in 2010, Amplify started off with the SkinnyPop popcorn brand and only recently diversified with the April 2015 purchase of Paqui, a tortilla chip company. But Amplify has seen fast growth for its initial SkinnyPop snacks, with net sales soaring from $16 million in 2012 to $132.4 million last year. And more deals could be on the horizon to help Amplify grow even more. President and Chief Executive Tom Ennis told Coins2Day acquisitions could occur about once every 12 months, with a focus on brands that can generate $100 million or more in annual sales.
Ennis said Amplify wants to partner with snack brands that are “better made with simple, clean, transparent ingredients.”
“People are snacking more, they are grazing throughout the day,” Ennis said. “What they are also doing is demanding better products.”
Amplify’s move to go public represents a move for private-equity owner TA Associates to cash out on part of its investment. The firm, which bought Amplify in 2014, will unload some of its stake in the company but will still hold more than 50% of Amplify’s voting power.
Under TA Associates’ control, Amplify has been busy expanding grocery store penetration and signing partnerships with major retailers such as Target (TGT) and Walmart (WMT). But SkinnyPop’s household penetration, which represents the percentage of households that have purchased the snack over the past 52 weeks, stood at just 5.2% at the end of 2014, compared to the average of nearly 23% for the top 25 salty snack brands. International expansion is another opportunity, as sales are concentrated in North America for now.
While Amplify’s share performance is disappointing today, trends suggest many snack makers perform well over time. Shares of Monster Beverage (MNST) and Hain Celestial (HAIN), both of which went public in the early 90s, have traded up over 500% over the past five years, data from Renaissance Capital shows. Notably, when almond and soy milk producer WhiteWave Foods (WWAV) went public in 2012, its share price slipped 1.5% on the first day of trading. They’ve since more than tripled.