We’re adding NEBC/ROVR (the Rover SPAC currently under ticker NEBC) to our long bias list. If you are unfamiliar with Rover, it’s a platform for booking pet care services like walking, boarding, house sitting, doggy daycare booked much like an Airbnb style model where you search and choose your provider and rate via website or app. Service providers have full profiles, pricing, reviews, ratings, etc. to make the service selection process as easy and as comfortable as possible for pet owners.
There are few names we can think of that could have as much incremental demand upon reopening as this one, and it’s a company that has several longer term consumer tailwinds at its back. There is the initial re-opening play, as people return to work and travel, pet owners will need some dog walking, boarding, sitting services that they haven’t really used since being stuck a home during the pandemic. Then there’s the pet category which has seen accelerated pet ownership, increased spending on pet care on a per pet basis, and continued humanization of pets where the new generation of pet owners would probably rather have a friendly pet lover in the area watch their beloved ‘child’ rather than sending it off to a kennel for long weekend during a vacation to the Caribbean. New pet owners will be starting the pet care search soon, deurbanization and housing turnover means people will have to find a new provide after moving, and Rover represents the digitalization of prior ‘manual’ service processes like we have seen from the likes of Uber, Airbnb, Fiverr and OpenTable. From our research so far, it seems awareness for Rover is still relatively low, so with the company going public (increases awareness in itself) and the cash injection from the deal, the company can ramp marketing spend that will drive rapid awareness growth concurrent with the ramping end demand.
The valuation is a bit rich on known and NTM numbers, but we think Rover is poised for 2-4 years of hyper growth. Competition is a moderate concern here, but Rover is the current leader in the industry, and we think it could be an acquisition target should one of the larger pet ecommerce players (CHWY, AMZN) want to accelerate their pet services offerings, rather than building from the ground up. With the SPAC trading at $9.89 we think risk / reward makes a lot of sense here.
We’ll present more detail on the Rover business opportunity and investment thesis/valuation on our Pet Care Black Book this Wednesday at 10am. Other relevant tickers will include CHWY, WOOF, and STIC/BARK.
