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The Ollie's Bargain Outlet (Nasdaq: OLLI) stock price today opened at $22.60 a share.
Last night, the Ollie's Bargain Outlet IPO priced above its $13 to $15 range at $16. The deal raised $143 million.
That means initial investors saw an instant gain of 41.3% when OLLI stock hit the market this morning.
The total number of outstanding shares is 8.9 million. At $22.60 a share, Ollie's Bargain Outlet has a market capitalization of $1.2 billion.
Ollie's Bargain Outlet Holdings Inc. is a chain of closeout retail stores based in Pennsylvania. The company sells merchandise obtained from various retailers through either closeouts or bankruptcy sales. They offer brand-name merchandise at up to 70% off other retail store prices.
If it follows the typical first-day trading pattern for IPOs, the Ollie's Bargain Outlet (Nasdaq: OLLI) stock price today will soar. According to Renaissance Capital, a manager of IPO-focused ETFs, the average first-day pop for IPOs this year has been 16%.
But there's one factor mentioned in Ollie's IPO prospectus that could threaten the company's profitability and stock price over the long term…
One Huge Influence on the Ollie's Bargain Outlet (Nasdaq: OLLI) Stock Price
Ollie's Bargain Outlet currently has 187 U.S. locations. It opened 23 new stores in 2013 and 22 in 2014. From 2010 to 2014, the number of locations expanded from 95 to 176, marking a compound annual growth rate (CAGR) of 16.3%. The company plans to open between 25 and 30 stores by the end of this year.
In its IPO filing, Ollie's said it has the means to profitably expand to more than 950 U.S. locations within the next few years despite accumulating over $150 million in debt since 2013.
"We expect our new store openings to be the primary driver of our continued, consistent growth in sales and profitability," the filing read.
The Ollie's Bargain Outlet (Nasdaq: OLLI) stock price traded at $21.25 at 11:05 a.m. today. That's up 32.8% from the IPO price but down 6% from the opening price.
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