DD on PLBY
Hey Guys, so this is my second DD on a company so please be nice, let me know what you think. I recently came across this company due to NFTs which was very surprising because I had no idea Playboy was even a public company. It looks like they recently went public through a SPAC merger with Mountain Crest Acquisition Corp. I had no idea what the company was about except for what most people know it as, a nude magazine company, so I thought of NFTs on hot girls of course that will sell, since we all know sex sells, look at only fans. And BTW the CEO did confirm they are doing NFTs for sure and is in the midst of working on this business opportunity.
After doing some more DD into the company I found out that it was a sound company and its looking to make a big come back. That is why I want to do a breakdown of the company and its potential. I think they deserve some attention.
Note: I do have shares in the company, and I plan on holding long term.
Marketing/Branding
So let’s start with Playboy as a brand. Almost everyone knows the bunny symbol. It is one of the most iconic globally known brands out there. And that is why I think this company will have a very bright future depending on how they market themselves. These are some of the impressive numbers in terms of their outreach. Playboy is ranked in the top 40th on list of world’s most powerful brands by licensing Global. 3 billion of global consumer spending, massive global reach, 1million active digital commerce consumers, over 180+ countries, 97% global un aided brand awareness.
Now looking at their business these are currently the sectors that they involved in. Each of these are multibillion-dollar markets.
- sexual wellness 388 billion
- style& apparel 1.9 trillion
- gaming & lifestyle 1.4 trillion
- beauty & Grooming 434 billion
This means that they have ALOT more room to grow.
Lines of business (how do they make their money)
Their current main focuses are on style & Apparel and sexual wellness. Which offers the greatest growth in terms of sales and business expansion. You can see this clearly in their most current revenue reported for q4 2021.
- sexual wellness - 139 million in revenue
- style & apparel - 124.4 million in revenue
- Gaming & Lifestyle - 16.6 million in revenue
- Beauty & Grooming - 16.2 million in revenue
But besides the first 2 areas that I’ve mentioned that are also looking to expand into gaming and beauty and grooming. Gaming would be involvement in the gambling industry like opening casinos in China or India, maybe sponsors with online poker companies for promotion. For beauty and groom this would be cosmetic products, which that actually have some already on their website.
Playboy is currently working on expanding and re-establishing their brand presence. They have close to 9 million plus followers on Instagram as well as many influencers and celebrities that is helping to promote their products through collaborations. Examples: Ariana grande, Beyonce, Kylie Jenner, Steve Aoki, Travis Scott, Lizzo.
Not only are they working with celebrities they are also working with many other fashion brands and ecommerce companies to fully market their products. Here are some of the examples.
- walmart, CVS pharmacy
- alibaba, supreme, taobao
check their investor presentation they outline over 20 brands they a collaborating with. https://www.plbygroup.com/static-files/0a30134f-9b1d-4246-9258-43dd25167b4c
As you can see from their business model they are switching to a more online presence. They acquired YANDY and is in the midst of transforming the playboy platform into an ecommerce destination.
Expansion and vision
Playboy has been expanding into other areas of the world as well as trying to bridge the gap between generations. In their most recent investor report they outlined that they will be trying to expand further into the Asian market driving sales into China and India with their new apparels. In terms of new generation penetration Gen Z and millennials has been the focused on their marketing brand, lots of shifting to younger females.
Financials
A closer look at their financials you can see that they have been growing quite significantly.
https://www.plbygroup.com/static-files/818b2992-0b0b-492b-bbd1-2a95b9b601dd
As you can see, they outperformed their sales DURING a pandemic. So, you could only imagine in the coming year what they will be able to do. Their performance for 2020 was absolutely smashing. YOY of 89% and fourth quarter revenue up 118%. They actually had to raise their guidance that they will be able to exceed 200 million in sales for 2021 which is amazing. In terms of their balance sheet, you can see that they lost a lot less money in terms of their overall revenue compared to 2019. Their P/S ratio is around 5 which is very comparable to the industry average. Their quick ratio is 7 with a gross margin of %84. (on finwvz)
Their management team is stunning and set up for success.
https://www.plbygroup.com/leadership
If you do a quick search Glassdoors you can see that their company has received a 4.1 rating which is pretty good for a company that’s growing.
Other Analyst and Stock Price
Let’s look at the predictions in price - Analyst prediction seems to be in consensus that this is a growing company and is due for some growth in the price.
Zacks - buy rating
tip ranks - high of $35
https://www.tipranks.com/stocks/plby/forecast
Downsides for the company
Playboy over the past couple of decades have always been the center of criticism for objectifying woman, and this is what the company will try to tackle. Recently they have made some very significant changes in their business model and their branding, trying to drive gender equality and move away from its history of misogynistic views of women but more towards self-expression/art/fashion.
You can see this in their magazine covers and overall focus for their photographs. Even the New York times did a piece on this in 2019, you can read here. https://www.nytimes.com/2019/08/02/business/woke-playboy-millennials.html
In order to prevail over this, it’s going to come down to the leadership and how they are able to pivot themselves away from the traditional views of Playboy being a misogynistic entity and more of a sexual wellness sand gender expression brand.
Other down sides to the company include lots of competitors. There are many apparel companies like Victoria Secret, Nike and adidas that can compete with Playboy. In the sexual wellness space competitors include Lifestyle and Church & Dwight (they make Trojan). Most sexual awareness brands have a very good grip on their customers in terms of brand loyalty so it will be hard for Playboy to draw them away.
TLDR
Pros
- Good Growth, shown by the revenue and has been putting up impressive growth numbers
- Lots of room to run for their sales, involved in multi-industries able to capitalize on many different forms of revenue
- Good Management – very experienced individuals that can get the work done so the company can start making money
- Brand is well known, lots of sources to market, pretty much markets itself without the company having to spend too much.
- Involvement in many lines of business (CBD, NFTs, cosmetics)
- Companies has royalties they can collect
- Movement away from its history and trying to rebrand towards a different audience, which is young females and empowering them.
- Growing market which gives more available room for Playboy to expand and gain more business without having to compete for market share
Cons
- Competition with other large players in each of the spaces that it is involved in
- Poor Brand sentiment for certain individuals – with the whole cancel culture I can see this being scrutinized for its past and history with objectification of women
- Might be spreading too thin with so many lines of business
Summary: I think this is a good company and has room to run till $35 at least. I think if they keep putting up these revenue numbers, they will likely hit 50 -60 dollars. I honestly think they will reach their target of 300 million ins sales before 2025. Their estimates are very realistic given how fast they are growing and how large of the presence they have in Asia.
Submitted April 06, 2021 at 02:51AM by choiph https://ift.tt/3dxkMms
