The Next AI IPO You Never Heard About

Mohawk Group Holdings Inc. (NASDAQ: MWK) entered the market very quietly on Wednesday afternoon. While this firm might not draw that much attention on its face as a consumer products company, it incorporates artificial intelligence (AI) into its platform, which is a leap that separates Mohawk from the rest of the pack.

The firm actually priced its stock at $10, below its expected price range of $14 to $16 per share, and it entered the market at $10. The firm is selling 3.6 million shares, with an overallotment option for an additional 540,000 shares. At the $10 price, the entire offering is valued up to $41.4 million.  The underwriters for the offering are Roth Capital Partners, AGP and National Securities.

This is a rapidly growing technology-enabled consumer products company. Mohawk was founded on the premise that if a company selling consumer packaged goods was founded today, it would apply artificial intelligence (AI) and machine learning, the synthesis of massive quantities of data and the use of social proof to validate high-caliber product offerings as opposed to overreliance on brand value and other traditional marketing tactics.

Mohawk has launched and sold hundreds of items on the Amazon U.S. marketplace and other e-commerce platforms. Management has incubated and grouped four owned and operated brands: hOme, Vremi, Xtava and RIF6. These product categories include home and kitchen appliances, kitchenware, environmental appliances (e.g., dehumidifiers and air conditioners), beauty-related products and, to a lesser extent, consumer electronics.

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Mohawk described its finances in the filing as follows:

We have doubled net revenue each year since 2015, resulting in net revenue of $73.3 million in 2018, up 101.0% over 2017, with net losses of $31.8 million and $23.1 million for 2018 and 2017, respectively. For the three months ended March 31, 2019, we increased our net revenue by $3.5 million to $17.8 million from $14.3 million for the three months ended March 31, 2018, with net losses of $8.4 million and $9.2 million for the three months ended March 31, 2019 and March 31, 2018, respectively.

The firm intends to use the net proceeds from this offering for general corporate purposes, including working capital, operating expenses and capital expenditures.

Shares of Mohawk were trading at $10.10 on Wednesday, in a range of $9.54 to $10.22 on the day thus far. As of 12:15 p.m. Eastern, about 500,000 shares had moved.

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