Ouch. So that’s what “unlimited upside risk” means.
It never pays to bet against Santa Claus, especially around Christmas.
The same could be said, for that matter, for retail legend Mickey Drexler, too.
Hordes of investors lost their shirts by gambling that the stock price of Drexler’s embattled casual-clothes chain J. Crew would tumble in his uphill battle to boost its sagging business.
The gloom-and-doom betting came from so-called “short sellers” who borrow shares and cash them out. When the stock falls, the shorts use their proceeds to buy new shares at an even lower price and then pocket the difference.
The stock was one of the most heavily shorted issues ahead of the holiday season, with one of every four shares traded in recent weeks in a short-seller play.
But the strategy blew up in the past several days when J. Crew said cash flows from the busy holiday soared to an eight-year high in Drexler’s surprise turnaround.
So the J.Crew initial public offering priced at $20 a share. The 18.8 million offering, which represents about a 33 percent stake, should raise about $376 million and give the company an initial market capitalization of more than $1.1 billion.
We’re told by a source that after Goldman Sachs closed the books Monday night there was consideration that the price might even get pushed up to $21 due to strong interest in the stock. The $20 share price is significantly higher than the $15 to $17 forecast earlier.
J. Crew prices IPO at $20, above forecast [Reuters]
Preppy clothing company J.Crew plans to issue 18.8 million shares it is issuing in its initial public offering, according to the June 13 Prospectus obtained by DealBreaker. Currently the estimated price per share is between $15 and $17 dollars, which is just about what a men’s t-shirt will cost you during a sale. The IPO is expected to finally price on Tuesday, June 27, according to a DealBreaker source. That price may be pushed up as June 27 approaches, however, by investors clamoring to get in on the IPO, our source said.
We were going to include a link to the prospectus itself but the file is huge. Trust us, you don’t want to download this monster. And, even more boringly, the prospectus only comes in plain white, with the usual black and red lettering. We were hoping for Tulip, Papaya or Clover.