Dave & Buster’s Entertainment, an arcade and restaurant chain, made its public market debut on October 9th after being privately owned for 8 years. The IPO was priced at $16 a share, on the lower end of the expected range of $16 to $18. The shares began trading the following day on NASDAQ under the ticker symbol “PLAY.”
Dave & Buster’s shares began trading a dollar above their initial public offering price at $17. The stock rose as high as $18.43 before ending the day at 17.28. Following the $16 price, the company achieved a valuation of $625.4 million and raised $94.1 million.
This marks the possible beginning of substantial growth for the Dallas Company. This is not the first time Dave & Buster’s was a publicly traded company—it was publicly traded from 1997 to 2006 before being bought for $257 million by Wellspring Capital Management, a private equity firm. Less than five years later, the company was sold to Oak Hill for $570 million. In 2011, the company filed for an IPO but shelved its plans the following year. Since then, the company’s market cap steadily increased, from $542 million in 2012, to $608 million in 2013, to $675.4 million in 2014 (following Friday’s close).
The stock performed “quite well,” said Stephen King, the company’s CEO. Despite the NASDAQ declining 2.3% that day, PLAY closed the first day higher by 7.5%. After using the proceeds to pay down company debt, King optimistically plans to expand operations, growing the company from its 70 locations nationwide to a projected 200 locations within the U.S. and Canada. The CEO hinted at opening locations internationally, as well.
Critics, on the other hand, are less optimistic. Despite its promising returns in recent years, as of August 3rd, the company reported $529 million in debt. Subtracting the amount raised from the IPO, the company would still be $434.9 million in debt. Wall Street is likely to want more robust growth or push for a franchise model if the company is to succeed long-term, and investors will not ignore the debt burden any time soon.
Fun and Games or Serious Business? Dave & Buster’s Goes Public (PDF)