Solo Brands draws at least two downgrades as stock drops to lowest point since 2021 IPO

By Steve Gelsi

Citi and William Blair cut ratings on maker of Solo Stove portable fire pits after company issues revenue warning

Solo Brands Inc. has drawn at least two analyst downgrades on the heels of a revenue warning earlier this week, with the stock now trading at all-time lows since its initial public offering in 2021.

Solo Brands Inc. (DTC) fell 0.5% in premarket trading on Wednesday. The stock closed Tuesday at $3.50 a share, compared to the $17 price of its IPO less than three years ago.

On Monday, the online retailer of outdoor lifestyle products cut its 2023 revenue forecast to $490 million-$500 million, from its earlier view of $520 million-$540 million. It also named a new chief executive, Christopher T. Metz.

Citi on Wednesday downgraded the stock to neutral from buy and said the company's "fire doesn't look as bright" due to a more challenging outlook on a softer-than-expected holiday sales.

"The changing management team further compounds uncertainty about 2024 for which any changes to the business will likely take time to show up," Citi analyst Chasen Bender said in a research note.

William Blair analysts Phillip Blee and Sabrina Baxamusa on Tuesday downgraded Solo Brands to market perform from outperform.

A marketing push from celebrity Snoop Dog in the company's first national advertising campaign has not boosted the company's prospects significantly, the analysts said.

While the campaign was released "with much fanfare" ahead of Black Friday, the company did manage to "raise brand awareness among a broader set of consumers but fell short of the expected sales lift on a longer purchase consideration cycle," analysts said.

But the effort could offer potential upside over the longer term, analysts said.

While the company's partnership with Target Corp. (TGT) is continuing in the short term, "the long-term opportunity remains uncertain," analysts said.

-Steve Gelsi

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01-10-24 0802ET

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