The underwear disruptor Step One Clothing Limited (ASX: STP) share price has skyrocketed after the company completed its first day of trading as a public company.
The Step One share price finished yesterday up 79.73% to $2.75.
If you haven’t heard of Step One, check out their vibrant boxers range including Juicy Plums, Black currants and Smashed Avo.
In summary, Step One has built a community of customers who love its organic bamboo jocks, which have been designed to minimise chaffing.
Amazing what a fresh pair of jocks can do
It’s not every day you see a share price rise 80% on debut. However, the market clearly got a bit excited about Step One today.
The company recently completed its initial public offering, where it raised $81.5 million at $1.53 to supercharge growth.
The business is now trading on an earnings before interest, tax, depreciation and amortisation (EBITDA explained) multiple of 29.
Given the business is forecasting only 20% growth in FY22, its valuation is reaching the pointy end.
Is Step One a good investment idea?
Step One is an awesome Australian success story. In less than five years, the business has gone from ordering 5,000 jocks to selling over 1.25 million pairs.
It has no physical stores, with customers ordering the product online through its website.
Customers rave about the underwear. It radically reduces chaffing by using a compression-like material on the inside of the briefs.
The rest is made from organic bamboo, which uses 60% less water than typical cotton underwear.
45% of its customers are repeating, while 37% are female despite the business having only sold male products.
Step One is capital-light, meaning it doesn’t have very many assets.
The company outsources its supply and manufacturing. Supply chain problems have caused issues for several retailers including Kogan.com Ltd (ASX: KGN), so it will be worth keeping a track of how management is handling this risk.
For a more in-depth review of Step One, check out the Rask Media 5-minute guide.
What next for the Step One share price?
For shareholders lucky enough to get in at the IPO, it’s a great result.
Some may take profits after the rapid rise today, but clearly, there is strong demand from the market for Step One shares
The company will likely provide a second-quarter update in January before releasing its half-year results in February.
To keep up to date with the latest on Step One and IPO’s, be sure to bookmark the Rask Media news site.
Looking for share ideas? Check out two ASX shares I’d buy and hold for the next decade.
