Zooplus AG (ZLPSF), an online retailer of pet products, might not be a screaming 'investment opportunity' at first glance. However, a deep dive into their publicly available financial data reveals a compelling trend that Wall Street seems to be missing—a trend suggesting Zooplus is poised for a comeback.

Back in 2019, Zooplus enjoyed a market capitalization exceeding $3 billion, driven by a surge in institutional investment. This confidence reflected their online-focused business model in a rapidly expanding pet market. However, by the end of 2021, a perfect storm of supply chain disruptions, heightened competition, and an economic downturn in key European markets impacted their profitability. Consequently, their stock price plummeted, scaring off institutional investors.

Today, Zooplus is trading on the less-regulated PINK exchange with a market capitalization hovering around $1.43 billion. While this represents a significant drop from its peak, several indicators suggest a potential resurgence.

The most striking indicator is the dramatic reduction in outstanding shares. In 2019, the company had over 18 million shares outstanding. As of 2021, that number has dropped to just over 7 million. This decrease doesn't appear to be due to stock buybacks, as the cash flow statement doesn't reflect such activity. Instead, the data suggests a strategic move by the company to consolidate ownership, potentially in preparation for a relisting on a major exchange.

This hypothesis is further supported by the significant increase in 'other stockholder equity' recorded in 2020 and 2021. This line item often signifies private investments or strategic partnerships, raising the question: has a private equity firm or a major player in the pet industry quietly acquired a substantial stake in Zooplus? If so, this could be paving the way for a future revitalization.

"Despite the challenges of 2021, Zooplus still boasts over $2 billion in annual revenue. This demonstrates the fundamental strength of their online retail model in the ever-growing pet market, which is projected to reach a staggering $350 billion by 2027. Zooplus is well-positioned to capitalize on this growth. (Source: Grand View Research)"

If Zooplus were to relist on a major exchange, the combination of reduced outstanding shares, robust revenue base, and potential backing from a major investor could create a perfect recipe for a dramatic stock price appreciation. This makes ZLPSF a potentially undervalued play in the booming pet care market for savvy investors who can spot the signs.

Outstanding Shares Over Time