Should You Buy STIC SPAC Stock Before Merging With Barkbox?

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Amid the ongoing SPAC mania, investors are looking forward to the STIC SPAC, which will bring another company public this year. Northern Star Acquisition (STIC) announced in mid-December that it would merge with BarkBox. BarkBox is a subscription service provider for products for dogs and dog owners.

Should I buy STIC SPAC stock before the merger?

BarkBox’s business model is based on subscriptions and offers predictability, transparency and cross-selling opportunities. In 2020 alone, the company’s subscriptions rose 58 percent. Now it has more than 1.1 million subscribers compared to just 80,000 in 2014. The company is trying to seize the opportunity by expanding into new product categories and markets. The overall addressable market is still huge. A little over 1 percent of the nearly 80 million pet families subscribed to BarkBox.

Source: Koyfin

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The company’s gross margin is also high at 60 percent (estimated) for fiscal 2021. Since the company is focused on market share, it is expected to make losses through at least fiscal 2023. However, this shouldn’t be a huge problem. In a growth phase, companies tend to sacrifice margins for market share.

BarkBox’s CAGR for 2020-2022 is still an estimated 41 percent, while Chewy, Freshpet, and Trupanion have CAGRs of 22.5 percent, 26.8 percent and 24.5 percent, respectively. With a higher growth rate, BarkBox stock is available at a reasonable price via the STIC SPAC and appears to be an attractive bet on the burgeoning US pet market.

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