Thursday, December 7

Is Build-A-Bear Stock a Buy?

If you are a day trader and looking for something new to sink your teeth into, a plushy company could be the very thing you were looking for all along. As a matter of fact, in one year, BBW climbed its way to +$13.61, a +434.82% increase! Now that we have your attention, let’s learn a bit more about Build-A-Bear’s stock evolution, what’s the origin of the company, and why the stock dipped and rose back recently.

What’s Build-A-Bear?

Build-A-Bear Workshop Inc, trading as BBW, was founded in 1997 by Maxime Clark in a small Missouri town named St-Louis, United States. Since 2016, at the head office, Sharon Price John has been President, Chief Executive Officer, and Director of the company. Specializing in the making and selling of teddy bears and other stuffed animals, the American retailer was steadily placing itself as the king of plushies on the market. Or so it was, until COVID happened.

For the past couple of years (pre-COVID), the company had a healthy increase in sales and profits. However, the steady rise to success was abruptly halted by the COVID pandemic in 2019, due to the new restrictions and lockdowns. A shop where you’re inevitably touching many plushies is not the safest place to be with a virus going around. At its lowest dip, the stock value was just a tiny bit over a dollar, the lowest it had ever been since the company was publicly trading.

Since when is Build A Bear publicly trading?

We can see BBW’s impressive introduction price of $35.15 on December 1st, 2004 with the best day trading platform. Despite presenting an increase in net profits several years in a row, the stock price for Build-A-Bear never quite reached that early stage rate again. The highest spike since BBW’s stock intro was $22.44 on January 16th, 2015.

That said, the plushy giant recently announced that stores were reopening. The reopenings caused exchange traders to buy lots of shares at a fairly cheap price, hoping for an eventual big payout when the company is fully operational again.

How much is worth Build-A-Bear Workshop?

The market cap is currently floating at almost $300M, presenting important losses in the past 2 years, but certainly gaining back traction in 2021. In 2018 and 2019, it is worth mentioning that the company had opened pilot shops in 25 Walmart locations. On top of that, around the same time, a new branch surfaced: Build-A-Bear Entertainment, making movies for the whole family. Without a doubt, Build-A-Bear is really everywhere now, even in the Pandemic Special episode of South Park!

The comeback of the century for Build-A-Bear

If we go back a year prior to this recent and intriguing event, the song was a bit different. BBW was trading at just $1.02 in April 2020, which was its lowest dip since forever. As you might have guessed already, these losses were mainly due to the COVID situation, forcing Build-A-Bear stores to close down nationwide.

The stores are finally re-opening, and the company took important steps in order to modify the in-store experience and strengthen its online offerings. BBW share has since bounced back all the way up to $16.74 as of today, a +434% increase. Don’t we ever wish someone would have told us to buy that dip one year ago?

Is BBW stock a short or can be a good long-term investment?

Build-A-Bear Workshop Inc. has been deemed a risky long-term investment, as the newly found price rise is consequently testing its support level. This is why you see the sudden jumps every day, as the trend has broken and may need to find support at a lower level, which may bring down BBW’s value a notch.

With an average volatility of 14,45% for June’s first week alone, many brokers think that it’s a high-risk stock. The Relative Strenght Index (RSI) was 80 a few days ago, which can sometimes present a good selling opportunity but in this case, overselling could bring more red than what you had in mind in the first place.

What should be the Stop-loss bottom line with Build-A-Bear stock?

First, if you are wondering what’s a stop-loss order, put simply, it’s a loss limit you can either set in a stock exchange software or manually manage by yourself. In other words, it’s the bottom/highest price of a stock at which you are willing to buy or sell said stock.

Considering the current trend, BBW is being overbought at the moment and the recommended stop-loss should be $17.78, -2.90%. As we previously mentioned, this is more of a short-term investment opportunity than anything else. There is a chance for the stock to find a solid footing around the $18.70 bar (and possibly higher) but we can’t be sure where this is all going to lead us afterward.

Should I invest in Build-A-Bear?

Over the past 2 weeks, the Build-A-Bear Workshop stock price is up by 98.44%. As of June 8th, 2021, it had seen a 6.02% increase in one day, +1.04. Indeed, many people need a cute stuffed animal in these difficult times. Hospitalized patients, kids that need a comforting toy, or just someone who is looking for the perfect cute little gift, it seems to be the right time to buy in the stuffed empire of Build-A-Bear Workshop.

Now that the company is reopening its numerous stores globally and strengthening its online services, we can assume that it will only get better from now on. Moreover, we are talking about 400 locations, majorly located in the US, Canada, Japan, and the United Kingdom, so there is a real potential here for natural growth. With its new online service, you can literally design your teddy bear online and then go get it in-store to the nearest location to your home. That way, there is no contact, and a lot less risk to catch a pesky virus in the process. With the new online features and the stores getting back on track, the future of Build-A-Bear is bright!

Of course, nothing is certain, maybe the stock price will stagnate between $16 and $18 for a while, but it’s hard to imagine another important dip for the months to come.

Leave a Reply

Your email address will not be published. Required fields are marked *