You might not have heard of Ronco before, but you’ve seen their products. For over fifty years, Ronco and its chief inventor, Ron Popeil, sold every strange kitchen device in existence. They’re the makers of the Veg-O-Matic, a popular food processor. They brought the Showtime Rotisserie Grill into millions of American homes. Popeil personally shilled for these products in commercials and infomercials, coining phrases like “set it and forget it” and “but wait, there’s more!”
In recent years, Ronco fell on hard times. Popeil sold the company to a Denver-based holding company in 2005 to spend more time with his family. That company then filed for Chapter 11 bankruptcy in 2007 and sold itself twice over the next four years. A consumer products company called CD3 picked up the flailing company in 2011 and sold their products in stores and on TV.
Since CD3 stepped in, Ronco started getting their finances back on track. The company isn’t profitable, but they’ve sold over $2 billion worth of products over the last six years. That’s not bad for a company that makes gimmicky products that aren’t as in demand as, say, a KitchenAid mixer.
To capitalize on their recent success, Ronco decided to take a page out of Snapchat’s playbook and go public. Within six months, you could buy stock in a company famous for the Pocket Fisherman and Mr. Microphone. This isn’t the first time an As Seen On TV company becomes publicly traded, but it’s the first time in quite a while.
But wait, there’s more! Early investors will also receive anything from a discount to a free Showtime Rotisserie, depending on how much they invest. There’s only one problem: that free rotisserie might be worth more than the actual stock.
Ronco wants to go public to pay off debts and expand.
Going public would give Ronco a theoretical value of $110 million. This would help them raise money for expanding into more stores and more advertising. The company still makes money through TV ads and QVC, but expanding would let them sell products at more physical and online retailers.
Raising money will also help the company pay off $17 million in debts. Getting out of debt could help Ronco turn a profit, as the company is currently losing money. They posted a loss of $2.7 million in the first half of 2016, which shows they still have a bit to go before they’re in the black.
Ronco’s IPO plan is pretty wild.
If you want to buy Ronco’s stock, you must invest at least $120. The company plans on offering shares for $6 each, meaning you would have to buy a minimum of 20 shares. If you spend over $1,000 during the company’s IPO, they will give you a 20% off coupon for purchases on Ronco.com. Investors giving the company over $5,000 will receive to a free Showtime Rotisserie oven.
These incentives are rather odd for a company trying to go public. When a private company files for IPO, they often give their staff gifts to commemorate the event. It is rather offbeat for a company like Ronco to incentivize investments by offering discounts and giveaways.
Should you invest in Ronco?
The company’s products are popular to net them billions in sales over several years. Yet the company’s mismanagement and lack of profitability caused them to go bankrupt. If you think Ronco’s products would benefit from placement in more stores and help them achieve profitability, do your research before you consider investing in them later this year. If you’re of the opinion that Ronco’s products don’t have much of a future, you might want to consider this sushi IPO instead.