Puppies lose their shine: pet craze slows, puts businesses on the spot
Puppy eyes only work for a very long time.
As 13 million U.S. households welcomed a new pet between March and December 2020, and sales of the U.S. pet industry increased 10% to $ 100 billion for the first time in 2020, market data is starting to suggest that the scorching days of the pandemic pet craze may be over. . And pet companies could soon find themselves with a much shorter leash as a result.
Take a bite out of the margins
Less than two-thirds of the year, VC-backed pet businesses have already raised more than $ 1.1 billion in 2021, the most of any year in history. But the boom in pet services in the pandemic era hasn’t necessarily translated into better margins in the industry, and the numbers suggest the pet craze may be on. his last legs:
- In June, New York City animal care centers welcomed 1,393 animals, more than double the number in February. The Humane Society of Dallas County’s contribution is now twice as high as before the pandemic.
- As shares of pet insurance provider Trupanion have climbed 250% since the start of the pandemic, and revenue rose to $ 168 million in the second quarter from $ 92 million in the same period in 2019, the company was actually $ 9 million in the red as insurance bills exceeded revenue. growth.
Financial plan for dog bites: As cuddly as their merchandise may be, investors haven’t always found a soft landing with pet companies. The poster child of the dot-com bubble was arguably Pets.com, which was liquidated after imploding in 2000. More recently, SoftBank suffered a large loss on a depreciation of its $ 300 million investment in Wag troubled dog walking app in 2019.