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Why Brilliant Earth May Have A Brilliant IPO


Brilliant Earth filed for an initial public offering this week, and its registration statement was full of interesting data.

We can now do rough comparisons of how the 16-year-old company stacks up against other digital native jewelry sites. Brilliant Earth sold $250 million in 2020. By contrast, its main competitor, Blue Nile, is on track to hit $600 million in sales this year, according to its CEO. Its other main competitor, James Allen, sold $301.4 million in its last fiscal year (which ended in January), according to owner Signet.

We can also see that Brilliant Earth is profitable, but not wildly so. It made $10.9 million in the first six months of 2021, and $21.6 million in 2020. It posted a $7.8 million loss in 2019, and the filing hints that the preceding years weren’t much better for the company. “We have a history of losses,” Brilliant Earth warned in the filing, “and we may be unable to sustain profitability.”

Despite this, industry analyst Paul Zimnisky predicts Brilliant Earth will likely get a warm welcome on Wall Street.

First and foremost, it’s shown a 32% compound annual growth rate (CAGR) since 2016, when its sales were just $83 million. “Wall Street is addicted to growth,” he says. “Brilliant Earth is growing at 32% a year going back to 2016. That is what makes this attractive. The way that Wall Street looks at a company, they say, ‘If they have sales growth, we can find a way to turn that into profit.’”

Secondly, Wall Street is looking for businesses that are considered ESG (or environment, social, governance) friendly, and some of those companies even command a premium. Brilliant Earth will probably fit that bill.

In addition, the stock market is booming; 2021 is already a record year for IPOs. Plus, Brilliant Earth is a “digital first” company, and many in Wall Street remain infatuated with tech.

“Online sales of fine jewelry have soared the past few years,” says Ganesh Kumar, founder of, a financial site. “Gems aren’t still sold online as much as other products. This huge opportunity is out there for Brilliant Earth to capitalize on.”

Another possible area for expansion: international. “I was surprised that they do 93% of their sales in the United States,” says Zimnisky.  

Two other things stood out from the filing:

Zimnisky was hoping for more information about Brilliant Earth’s sales of lab-grown versus natural diamonds, since the company is a big player in the lab-grown space and that sector badly needs more transparency. That info hasn’t popped up yet, but he’s hoping it will show up in statements down the line. Even so, the company’s average price point ($3,152) implies that natural diamonds still represent a significant amount of its sales.

There’s also its rather large marketing expenses. In 2019, Brilliant Earth shelled out $57.1 million for “marketing, advertising, and promotional costs.” That tops, by more than $10 million, the entire 2018 budget for the Diamond Producers Association (now Natural Diamond Council). Most likely Brilliant Earth’s budget was largely spent on Google and Facebook ads, which have been eating into the profitability of e-tailers in general.

That’s a huge amount of money, but Zimnisky considers that smart positioning.

“They don’t waste money on billboards,” he says. “It’s all online. Younger generations are all online.  Yes, they’re spending a lot on advertising, but they are growing at a sweet growth rate. And that is how Wall Street will be looking at this.”

(Photo courtesy of Brilliant Earth)

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By: Rob Bates

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