What happened to Winc?

winc bankruptcy

What happened to Winc?

Watching about Winc to access at Chapter11 bankruptcy it’s really weird. Only 1 yr ago the company became a Public one, with 13$ for share at its debut. It raised $22 M one shot, and until 2021 had been funded with $54,2 M (source: Crunchbase) from many investors from California, Japan and Hong Kong.

Winc was founded in 2012 and reached 70 million dollars. The Q3 financial report showed the difficulties it was facing. Winc reported an overall decline in total net revenue, with DTC net revenue declining $2.8 million. In September the CEO Geoffrey McFarlane, co-founder, resigned; the role of CEO was provisionally entrusted to another co-founder, Brian Smith.

Up to now no official communication from the company, and the website is unreachable: the 1020 error means that the internet routes to the site’s url have been closed (to put it simply).

Winc, down from the star

Just in March of this year the shares were trading at $13 also thanks to a good report for Q1 2022. But in September, just before McFarlane’s resignation, the forecasts were not more so good, and the stock is down 17%. Winc shares are currently listed at 30 cents. This led to a Chapter 11 filing.

The Q3 2022 report illustrates an unfortunate situation; Winc has accumulated many debts and against a turnover of 72 million dollars there has been no profit. In a statement, the company confirmed that:

In this challenging macro environment, the Company is prioritizing cost control and cash flow management as we take steps to improve profitability while focusing on our core business (source: The Drink Business)

The problem of companies doing D2C is part of the situation that many companies face; there is a general decline in investments, as Paul Mabray also confirmed after the closure of his startup Pix. Winc’s largest creditor is Meta, with whom he owes over $750,000, most likely all from advertising. In recent months many technology companies are starting to have some difficulties precisely because companies are decreasing advertising investments.

Companies like Facebook and Google, having their revenue on advertising, may find themselves facing more difficult situations than usual. In any case, Winc’s filing for Chapter 11 comes quite suddenly. Prices until before the summer were good, and forecasts were positive, despite a decline in operating results. For now, however, all the information is here, so we will have to wait for more news before understanding what happened and why.

Foto di Nicola Barts

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