Pacific Trader: BuildDirect’s remodelling may yet work out

The digital building supply platform has more than doubled in value since last spring

The stock: Are there second chances in business? There are! Just look at Roger Hardy’s return to online eyewear sales with Kits Eyecare (TSX:KITS), one of the best-performing B.C.-based stocks of 2023. Another candidate for a phoenix-like revival might be BuildDirect (TSXV:BILD), at least judging by its performance over the last nine months.

The drivers: Founded in the late 1990s by Jeff Booth, Vancouver-based BuildDirect raised more than $100 million in venture capital and rose to near-unicorn status on its promise to become an Amazon-esque retail platform for building supplies. After years of missed promises, it came crashing down in 2017. The company filed for creditor protection and Booth moved on. But a succession of managers kept the business alive, paring down its product offering to flooring and decking materials, focusing on the business-to-business segment and opening a small network of “Pro Center” showrooms. After emerging from creditor protection, it went public on the TSX Venture exchange in 2021.

BuildDirect fell flat in its first two years as a public company, from nearly $4 a share to below 20 cents last spring. But recently investors have taken notice of improvements under CEO Shawn Wilson and are holding out hope the company can fulfill at least part of its early promise, despite losing US$1.8 million over the first nine months of 2023. With its close at 52 cents on Tuesday (January 16), BILD is up 92.6 percent over the past year.

Word on the street: “Since joining BuildDirect as CEO in September 2022, Shawn Wilson has strategically transformed the company, which has resulted in a 500-basis-point [five-percentage-point] improvement in gross margin and seven quarters of positive adjusted EBITDA [earnings before interest, taxes, depreciation and amortization],” Leede Jones Gable analyst Greg McLeish wrote upon initiating coverage of the company earlier this month. He has a “buy” rating and a one-year price target of $2 on the stock.

Coming and going: If there’s to be a second chance for BBTV Holdings (TSX:BBTV), it lies some time in the future. The Vancouver-based digital media company was delisted from the Toronto Stock Exchange on January 11 after falling to just 37 cents a share and taken private by founder Shahrzad Rafati. The stock made its debut in 2020 at $16.