Revolve Group, LLC [NYSE: RVLV] is easily one of the best-performing IPOs in 2019. The company went public on the Friday, June 7th, 2019, and it closed trading at $34, up 88.89%. It’s a good indicator that investors have lots of confidence in Revolve, as an investment with high growth potential. There are a number of factors that give this company the power to keep growing going into the future.
For starters, it is quite innovative in its approach to marketing. The company has been successful in leveraging on Instagram and with social media influencers to grow its brand. For context on how big of a deal its Instagram presence is, the company has more than 3.1 million Instagram followers. On top of that, the company has a social club, and a festival, the Revolve festival, where it invites celebrities. It’s a strategy to keep building the Revolve brand profile. This ability to leverage on social media has enabled it to connect with millennial’s, and Gen Z who are its key clients. It’s a positive indicator for its long-term growth, as more millennial’s start buying its products.
Besides its marketing power and approach, this company has a relatively low overhead. That’s because, it has no brick-and-mortar stores, which keeps its overhead per unit sold lower. In essence, with growing revenues, the company’s core numbers such as the profit margins, and the return on equity are likely to grow at a faster / healthier rate because it doesn’t operate a lot of brick and mortar stores.
On top of that, unlike most recent IPOs that are relatively new companies, Revolve is an old company. It has been in operation since 2003. It survived the 2008 crash and many other challenges. That’s a good indicator that Revolve is sitting on solid ground. Being in business for all those years also means it’s established a strong supply chain, which is key to business sustainability. Longevity in business has also helped the company grow its brand offering. At this point, Revolve offers roughly 45k apparel products, and over 500 brands. This makes it fundamentally stronger than most startups going public, since it is already an established business.
Its strong fundamentals have even caught the eye of Citron, a stock commentary that rarely ever comments on IPOs. In a tweet, Citron stated that they usually don’t comment on IPOs, but they have a positive outlook on RVLV. Perhaps one of the reason they mentioned RVLV was because it has a growing e-commerce presence, and has one of the best unit economics.
This is definitely one IPO you should keep an eye on in the coming days. As for the chart, RVLV has only been trading for one day, so I would say the support is around $25.11 short term and the resistance for the next breakout is at $38.