
Crocs (CROX) Case Study
Ameet Rai
Electrical Engineer and Swing Trader focused on achieving super-performance. Through extensive studies of previous super-performance stocks and proprietary data-based research I provide guidance for new traders with an emphasis on building processes and teaching traders how to think and trade for themselves.
May 8, 2023
Within less than two years after Crocs’ IPO on February 8th, 2006, the company’s stock price increased by over 425%. Capturing even a fraction of such a tremendous rise could be life-changing, hence the significance of studying the top-performing stocks, including Crocs, and learning to identify them early on.
It’s critical to understand the IPO Lifecycle as the biggest winners frequently arise from new IPOs. In this case study, we examine the factors that propelled Crocs’ remarkable rise and explore the approaches we could have used to capitalize on this impressive surge.
This blog uses concepts developed by the Lifecycle Trade Team who have studied thousands of IPOs to distill the qualities that lead to monster moves and create super growth stocks. You can learn more from them directly in the IPO Masterclass.
How It Began
Crocs was founded by 3 friends – Scott Seamans, George Boedecker, and Lyndon Hanson. While on a boating trip together, Scott Seamans, an already successful inventor who was semi-retired, asked his friends to try on a pair of rubber-like clogs, which we would now know as Crocs. His two friends thought the shoes were ugly, but were sold on their functionality and comfort.
The initial pair of shoes were made by a manufacturing company called Foam Creations, which used a special resin with unique properties. These properties made the shoe odor & water resistant, slip-resistant, and capable of molding to the wearer’s feet, making them extremely comfortable.
As a result, the founders opted to acquire the foam resin technology from Form Creations, renamed it Crosslite, and proceeded to develop the now-iconic Crocs shoes. After an initial unveiling at a boat show near the end of 2002, the shoes were an immediate hit.
Within 1 year, the company would go from selling 200 Crocs at that boat show to over 76,000 pairs of shoes. Crocs’s growth continued to accelerate year after year, going from $1 million in sales in 2003, to over $13 million in 2004, and over $100 million in sales in 2005.
Croc’s unique and new product was catching fire and it was showing through the company’s phenomenal sales and earnings growth. By the end of 2007, Croc’s sales increased to an astounding $800 million, over 60 times what the company’s sales were in 2004, with a net income of over $150 million.
When The Move Started
On February 8th, 2006, Crocs went public at $15 per share. For over 6 months, CROX went through its Institutional Due Diligence phase (I-DDP).

The I-DDP is a period where a recent IPO trades sideways or down and institutional investors are researching if they are interested in building a position in the stock.
However, as the stock tightened on the right side of its pattern, the stock presented its first buy point on September 25th as it broke out on massive volume. This day marked the start of the Institutional Advance Phase (I-AP).
Daily Chart

The I-AP is the phase of the IPO’s lifecycle that occurs after the first mature base from the I-DDP, where the stock trends higher for a long period of time as institutional investors accumulate positions.
Following the entry point in September, the stock increased by an incredible 380% over the course of the next 400 days. During this massive run, Crocs continued to expand rapidly and put up phenomenal growth numbers, growing revenue by over 200% year over year as well as net income.
Weekly Chart:

After entering CROX as it broke out, how would you manage the position to get the most out of this move?
Referring back to the IPO Lifecycle, certain sell rules would lock in gains based on different signals. For this case study, we will look at the Midterm sell rules, designed to lock in as much gains as possible without going through excessive drawdowns.
Based on the Midterm sell rules, it would have kept you in CROX until November 1st, 2007, when CROX had its first weekly close below the 10-week SMA. Crocs had closed below the 10-week SMA multiple times before, but this sell rule only triggers when the stock has been held for over 1 year.
The complete Midterm Sell Rule is discussed at length in the IPO Masterclass
Daily Chart to show precise days of sells:

Weekly Chart

Another sell rule would have been triggered on the same day, as the stock closed the week more than 30% off its all-time high, giving you even more reason to sell.
Overall, from entry to exit, the trade on CROX would have netted an outstanding 187% return over 411 days! A phenomenal move fueled by the massive adoption of its new and innovative product, leading to rapid company growth and expansion.
More often than not, big winners like Crocs come from recent IPOs with new and innovative technologies that can change the world. A few examples include Tesla, Amazon, Google, Facebook, and many others.
If you’d like to learn more about these concepts and master trading IPOs, check out the IPO Masterclass, where we dive into much more detail on how to find and catch the biggest winning stocks.
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