InvestorPlace Alex Sirois recently wrote that Black Rifle Coffee Company (NYSE:DCFC) at 285,000 coffee subscribers. You would think that with this kind of customer loyalty, BRCC shares would be a slam dunk investment.

May be. And maybe not. Here’s why.

It’s been 13 days since Black Rifle Coffee completed its merger with SilverBox engaged Merger Corp. I, an ad hoc acquisition company (SPAC). The SPAC raised $300 million in February 2021 in order to be able to pursue a combination with an operating company like BRCC.

When I first wrote about Black Rifle Coffee in November, I forgot to mention that he belonged to Authentic Brands LLCthe parent company of BRCC.

It has an eerily similar name to Group of authentic brands. This retail conglomerate abandoned plans publish in November. She sold a significant stake in the company to CVC Capital, HPS Investment Partners and certain existing shareholders, including black rock (NYSE:BLACK).

But I digress.

The value of BRCC shares

If Authentic Brands Group CEO Jamie Salter was behind BRCC, I might be more excited about its $862 million market cap. But, alas, it is not.

According to its latest presentation, the BRCC 2020 turnover was $164 million. Its estimated revenue for 2021 is $230 million. That’s a price-to-sales (P/S) ratio of 5.26x. By comparing, Starbucks (NASDAQ:SBUX) is trading at 3.6 times sales. So even if you base BRCC’s P/S ratio on projected revenue of $430 million for 2023, that’s 2x sales.

My colleague points out that Black Rifle is solidly in the dark. However, this is not entirely true. Unless I forget something, his figures are those of the company gross profits, no operating or net profit.

Page 54 of Black Rifle’s presentation shows that between 2019 and 2023, it expects to generate cumulative gross profits of $512.7 million. However, this translates into cumulative operating losses of $12.4 million.

For the last 12 months ended December 31, 2021, Starbucks gross and operating profits for the last 12 months ended December 31, 2021 were $8.7 billion and $4.9 billion, respectively.

Do you still think Black Rifle’s valuation is worth more than Starbucks? I do not.

What about the subscription base?

I’m pretty sure if Starbucks thought the coffee subscription model was all that and a bag of chips, they would have launched something.

As my colleague stated, BRC had 285,000 direct-to-consumer (DTC) subscribers in 2021. That number is expected to reach 325,000 or more by 2023. In 2020, DTC’s revenue accounted for 84% of its revenue. By 2023, this figure will have fallen to 46%, as it strengthens its wholesale and outpost businesses. Makes sense.

On page 15 of its presentation, the company estimates the annual U.S. home and online coffee markets at $14 billion. Thus, Black Rifle tries to reach these two markets.

How’s it going?

On the DTC front, it plans to grow its sales from $163 million in 2021 to $199 million in 2023. That’s 22% growth over 24 months. Additionally, it plans to grow its sales by 158% on the wholesale front, from $55 million in 2021 to $142 million in 2023.

Of the two segments, I assume the DTC business has higher gross profits due to its direct sales model. But for now, let’s look at the DTC segment.

Based on $163 million and 285,000 subscribers in 2021, Black Rifle generates approximately $47.66 per subscriber per month [$163 million divided by 285,000 divided by 12]. It expects to generate $51.03 per subscriber per month in two years.

It looks pretty good. However, on a daily basis, this amounts to approximately $1.70 per customer. I know I spend over $1.70 a day at Starbucks.

And nowhere does BRC present its customer acquisition costs and the lifetime value of a customer. I’m sure you can spit out a number, but it would be nice to know the exact numbers. This dictates the speed at which it achieves consistent net profits.

When it releases its first quarterly results as a public company at the end of March, that’s what I’ll be looking for.

The essentials on BRCC shares

Competition in the coffee industry is extreme. Starbucks has sold the rights to sell its coffee products worldwide to Nestle (OTCMKTS:NSRGY) in 2018 for more than $7 billion. Even the mighty Starbucks recognized it needed a helping hand.

If Black Rifle weren’t so focused on the political leanings of their clients, I think they might have a fighting chance. But when it alienates half of its potential customers, it also halves the total addressable market, from $28 billion to $14 billion.

In my opinion, this is not a wise decision. I will continue to follow the BRCC story. But at this point, I can’t recommend his stock. He doesn’t hit the bullseye.

As of the date of publication, Will Ashworth had no position (directly or indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.

Will Ashworth has been writing about investing full time since 2008. Publications where he has appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger and many others in the US and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia.