PLBY - Playboy

[manuelbean]

Hi guys, has anyone looked into Playboy recently?

 

The company went public through a SPAC (called Mountain Crest) in 2020 and after a twit thread by Kuppy, I decided to look into it. They've closed down the printing business and are now focused on 4 different segments: Sexual wellness (condoms, lubricants, lingerie); Style & Apparel (actually selling well in China to Gen Z); Gaming & Lifestyle, and Beauty & Grooming (fast growing market).

 

Something that bothers me is that the company doesn't disclose its financial history prior to 2019 (I wonder why that is!). I understand that the business might've been different before with the magazine and without Yandy (acquired at the end of 2019), but it would be good to have a little more financial history.

 

The CEO has mentioned going into the dating business, saying that the current dating apps lose the customer after the customer finds a partner, and that they would like to keep the customer for decades (?).

 

The company's presentation also mentions "intimacy subscription" (?) and "education services". I kind of get the idea about the education services, but the intimacy subscription, I'm still trying to figure out what it means.

 

*The company will start trading under the ticker PLBY after February 9.

 

 

 

 

 

 

 

 

[johnny]

Is junior still involved in the company?

 

Even if not; wouldn’t touch this with a ten inch pole.

[manuelbean]

I don't think so. Why would you say that?

[TwoCitiesCapital]

Is junior still involved in the company?

 

Even if not; wouldn’t touch this with a ten inch pole.

 

Or in my case, a 6 inch one.

 

::sorry - saw dick jokes in another thread and thought it made more sense here!::

[Jmac42600]

Just to update this thread. Hedgeye's Brian McGough thinks this is a 10-bagger and a very misunderstood name. Seems like Hugh Heffner was holding back the company's potential until he died. Now that he's gone, they are expanding into other markets. They also have a very low royalty rate on their merchandise that management intends to raise to retail norms. Check out this video: Starts the PLBY talk about 20 mins in and ends at about 28 mins.

 

[Castanza]

Why have renegotiations taken over 5 years? 

[Jmac42600]

Yeah so legacy contracts have to expire first, but also when Heffner died a Private Equity firm took over and has been putting a management team in place. Basically the management team that took over could be running a way larger company, but chose to come to Playboy.

[Castanza]

4 hours ago, Jmac42600 said:

Yeah so legacy contracts have to expire first, but also when Heffner died a Private Equity firm took over and has been putting a management team in place. Basically the management team that took over could be running a way larger company, but chose to come to Playboy.

It seems pretty interesting on the surface. Increase royalties, expand brands and product lines, etc. My main concern is the whole thing seems to hinge on brand adoption in China (Manuelbean says going well) and India (unproven). A lot of unknowns with this play. 

[Jmac42600]

20 hours ago, Castanza said:

It seems pretty interesting on the surface. Increase royalties, expand brands and product lines, etc. My main concern is the whole thing seems to hinge on brand adoption in China (Manuelbean says going well) and India (unproven). A lot of unknowns with this play. 

I don't think its too unknown tbh. First, the brand moat is there. This is a top 20 brand globally surprisingly above the NBA and up there with P&G. This is no longer a magazine, and instead has become a fashion company. The royalty rate rn is only 2%, and norms for brands like this are 7-12%. Plus, they can leverage their brand to expand into other markets such as sexual wellness, and beauty/grooming (which is what they plan on doing). In the sexual wellness space, its very fragmented and ripe for a top 20 global brand to take a large share. Imo, the margin of safety here is that they can renegotiate contracts to an appropriate royalty based on their brand strength, and once thats factored in it gives you a share price higher than today's price. Every other growth opportunity is gravy at that point.

[Castanza]

On 4/23/2021 at 11:08 AM, Jmac42600 said:

I don't think its too unknown tbh. First, the brand moat is there. This is a top 20 brand globally surprisingly above the NBA and up there with P&G. This is no longer a magazine, and instead has become a fashion company. The royalty rate rn is only 2%, and norms for brands like this are 7-12%. Plus, they can leverage their brand to expand into other markets such as sexual wellness, and beauty/grooming (which is what they plan on doing). In the sexual wellness space, its very fragmented and ripe for a top 20 global brand to take a large share. Imo, the margin of safety here is that they can renegotiate contracts to an appropriate royalty based on their brand strength, and once thats factored in it gives you a share price higher than today's price. Every other growth opportunity is gravy at that point.

First NFT auction is today. Honestly, I don’t understand the appeal to NFT but we’ll see. 

[Jmac42600]

11 hours ago, Castanza said:

First NFT auction is today. Honestly, I don’t understand the appeal to NFT but we’ll see. 

Yeah saw that. We'll see how they do. Likely a success.