Friday, February 26, 2021

The premieres of Westwing and Mosaico at B3 and the strength of the investor-consumer


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The debut of Westing, which in a simplistic way could be summarized as a furniture and decoration e-commerce, had an initial public offering (IPO) that can be considered successful. Put success on it! The operation totaled R $ 1.16 billion and the share came to R $ 13, very close to the ceiling of the suggested price range.

The distribution of securities in the bookbuilding sector, which is nothing more than a system of reserve of securities that measures demand and regulates the price before arriving at trading, indicated a first day of trading at B3 with pomp and circumstance. But behold, the stock fell 8.5% in its opening session and closed at R $ 11.90.

The explanation for this is a phenomenon that has already occurred, but not in these proportions. The popularization of the stock market is only just beginning, but that investor-consumer or consumer-investor is already showing signs of its potential. It is no secret for anyone working with this diverse corporate body called the market that major brand IPOs have more appeal to small investors.

Well then. Couple this with smaller operations and more challenging businesses to price. Add an investor to the scene with the feeling that he was totally out of the dizzying appreciation of the tech world and startups – and that part specifically applies to traditional foundries and, much to the individual investor. In the case of this last border, given the risk involved, being that thing that is in fashion, FOMO – fear of being left out, which comes from the acronym in English for fear of missing out.

Ready. Almost everything is explained about the thunderous 1st of Mosaic, with his Buscapé, Bondfaro and Zoom, plus the phenomenon Locaweb (who has never seen or heard the advertisement?), and the frustrating firsts of Bemobi and Westwing, despite the strong demand in the stock reserve – not to remember the first month down Melius e Sick, which debuted at a time of more skepticism.

Mosaico’s retail demand was no less than R $ 10 billion – almost the entire supply of Rede D’Or in that pocket. The reserves for Westwing were surprising, but stood at R $ 3.6 billion. The size of the operations was almost the same.

The volume of those interested in buying Mosaico papers, in the institutional offer, excluding the share of anchor and retail investors, was 20 times. At Westwing? 24 times. There is multiplication. In the case of the furniture and decoration e-commerce company, 70% of the papers were sold to long-term funds, dedicated to the foundation of the companies.

The shares of these technology companies have moved, in a trading session, at most, very much, between R $ 5 million and R $ 10 million – on the day of the premiere of the Buscapé owner’s apotheosis, the financial movement was R $ 7.5 millions. With this liquidity, it is very simple to realize that the institutional ones either enter the offer and make checks that make sense for their size – which helps to understand the size of the demand in the reserve – or stay out of that business for a long time. Basically, the buyer and seller of the next day of these companies is the individual investor or small investment houses, but small ones.

This investor, who is still in the financial education phase, knows almost nothing of what he is buying, how to assign value to it. When something he knows appears, it looks like a blessing. It gives a false sense of understanding and, moreover, “if I, an investor, use it, it is because a lot of people should use it too.”

It doesn’t need much science. Some conversations with freelance agents about investment platforms will clear up any doubts in five minutes.

But why, why didn’t Westwing and Enjoei have that strength? Because, without any sexism, these platforms are much more visited and accompanied by women. And, about them, the stock market survey and the data say a few things: they are only 26% of the total public and 21% of the total value of shares held by individuals. To make it more complicated for these newbies: women are much more conservative, stay away from IPOs and even more from what they don’t know. In addition, both still need to publicize their brand even more. Although they already have a relevant audience, there is an ocean to be explored.

Except for what is pure commerce, all digital startups or techs have a great challenge to sell themselves – and they continue selling themselves every day on the stock exchange – which is to make the public understand what they are, what they do, how they earn money and how they will do it to earn even more money.

This is part of the stone path. The market is a living animal and every day a new thing appears, a new movement to be understood. And the list of digital companies to come to B3 is quite big: there are more than two dozen.

For those who doubt the strength of the investor-consumer, it is worth visiting the case of Pink Farms. The vertical urban farm that produces 1.5 ton of leaves in a warehouse in Vila Leopoldina, in the apulist capital, decided to make its next round of seed capital via crowdfunding. What is the company looking for, in addition to R $ 4 million? Your brand ambassadors.

It doesn’t fit in a word

The Brazilian investor was accustomed to mining, steel, oil, paper, telecommunications, electrical, banks. This is what a word explains. Go tell me what, to stay in the most basic, Enjoei does in one word – thrift store online is not worth it because it is wrong. Tell me what Méliuz is, or more, what Bemobi (who?) Does.

To conclude: even the autonomous agents are unable to play this role. Few people really know what each one is. Do an interview with your own, if you have one. And get some more from the family.

The rookie

It starts off by saying that Westwing sells furniture and decoration online. Who participated in the offer explains that it is wrong, even, to put the business in the same balance that has the Mobly, another newbie on the trading floor, or that the newly transformed-into-unicorn WoodWood.

The reason for the difference: it doesn’t sell exactly the same things, much less the same way. The company’s proposal is somewhat ethereal like “inspiring each person to discover more beauty in their life”.

In other words, it almost doesn’t look like a slogan, but rather a mission of some spiritual guru. But with this corporate mission, the duo Andres Mutschler and Eduardo Balbão Oliveira, the company’s president and chief operating officer, has managed to make the operation generate cash since 2016, when it was still an arm of the German headquarters of the same name.

After watching the central office in Germany decrease the bet in Brazil, although the operation is progressing, they went in search of a venture capital fund and decided together to buy the business. They took them home, along with the Axxon Capital, not only the whole floor of what was going on here, but the right of the brand for all Latin America. Westwing here does not pay roylaties and does not depend on anything outside. Drank from the same source at the beginning and period.

The transaction, which bears the name of management buy-out, was completed in 2018 and, since then, the trio of partners has lived the perrengue of developing technology, resuming marketing positioning and putting everything on its own. In 2019, the house was tidy and grew again. In the pandemic, the thing exploded, with months of sales with more than 100% growth. Then, they decided it was time to cash a bigger check.

They did the math and concluded that R $ 400 million was as much as they needed to improve logistics, make more “galleries”, a type of concept store (there is only one, in Vila Madalena, for now) and speed up marketing a lot.

They achieved R $ 430 million in the offer. The other R $ 730 million came from the secondary sale of part of what the partners held, in order to offer the transaction to the foundries that operate in the public companies market, whose tickets are much larger than those of venture capital.

Westwing enchanted some houses – Tork Capital, Equitas and a few others acted as anchors and took over 25% of the business – due to the public engagement it achieves. The company presents its products “packaged” in complete aesthetic proposals. Everything has a scenario. It can be by theme, ethnicity or color. But everything arrives as in a Casa & Jardim magazine or better. And everything is for sale. Absolutely everything.

The company exhibits on social networks 14 thousand items per week and about 40% is always new. The followers, more than 1 million on Instagram and the 11 million monthly views on Pinterest (it is the largest in the website decoration segment), enter the platform about 4 times a week and make about 4 purchases a year.

The platform is a mix of entertainment and lifestyle. On average, users spend 40 minutes a week browsing campaigns. And to make it clear why Mobly and MadeiraMadeira are other animals, it is worth mentioning that 13% of 2020 sales were not from furniture and decoration products.

More than that, it was only from March 2020 that the consumer started to enter Westwing and search for “armchairs”, “sofas”, in short, static categories, through Westwing Now. Until then, the customer was held hostage of the current campaign.

The company’s growth frontiers are the reduction of logistical terms, the increase in physical stores and investment in marketing. Within the platform, the perspective is to sell more products that are lifestyle and not necessarily decoration and furniture and to carry out exclusive campaigns as a private label.

The company’s balance sheet for the first nine months of 2020 indicates that R $ 270 million were traded within the platform, practically double in the annual comparison, which led to a net revenue of R $ 168 million, compared to R $ 93 million. same period of 2019. Ebitda on this same basis went from R $ 2.8 million to R $ 10.4 million.


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