Restaurant software provider Toast Inc. is planning an initial public offering that could value the company at about $20 billion, according to a report.
Toast is using Goldman Sachs and JPMorgan Chase as underwriters for the listing which could potentially come later this year, according to the Wall Street Journal.
"I question how this valuation can stand up under any close scrutiny fully knowing that the brokers will no doubt price it below where it will go," Jim Cramer wrote on Real Money of Toast's reported valuation. "Let's put it this way: it's easier to make money with the stock than it is with the company."
Plans for an IPO aren't final, and the company could also consider a sale or a reverse merger with a special purpose acquisition company (SPAC); there is also no guarantee that the company will go public, the Journal reported.
Much like the rest of the restaurant industry during the pandemic, 10-year old, Boston-based Toast Inc. took a major financial hit in 2020, prompting CEO Chris Comparato to announce in April that the company was planning to reduce staff by about 50%, citing a revenue decline of more than 80% in March in most cities.
However, the company also started to rebound by mid-year, according to the Journal, amid new demand as the restaurant industry moved more to takeout services.
Last February, Toast announced a $400 million Series F funding round that valued the company at $4.9 billion. The round was led by Bessemer Venture Partners, TPG, Greenoaks Capital, and Tiger Global Management.
“As a result of our tremendous growth and commitment to the restaurant industry, we have continued to see a significant amount of demand from the investor community,” Comparato said at the time.