Is Playboy Stock A Buy?

PLBY Group (NASDAQ:PLBY) is the rebranded Playboy Enterprises, the global media and lifestyle company pioneered by Hugh Hefner.

The brand was engrained in pop culture due to the lavish parties thrown at the Playboy Mansion. Since those heady days, the firm has undergone several business model iterations, but has sustained a blend of fine art and eroticism in its digital publications.

The eponymous magazine was shuttered in 2020, but the brand continues to survive through a swathe of merchandizing and licensing deals. Playboy bunnies are still known and connected to the original ideals of living Hef’s playboy lifestyle.

After Hefner died in 2017, his estate sold shares for an estimated $35 million. More recently, the group went public through a reverse SPAC merger. Since then, it gave investors 3x returns within a year, after rising to a 52-week high of $63.04 and settling around a $1.5 billion market capitalization.

After the share price run-up and decline, is Playboy stock a buy?

Playboy: Breaking Stereotypes

Playboy started as a magazine that held a circulation of over seven million copies in 1972. Hefner founded it after raising $8,000 from investors and published the first issue with a nude photo of Marilyn Monroe in December 1953. The men’s magazine used these cover models and centerfolds to release sensational stories that challenged modern conventions about sex, nudity, feminism, civil rights, and more.

An interesting piece of trivia is that the centerfold of the November 1972 issue of Playboy magazine is responsible for the scientific breakthroughs in image processing that created the modern JPEG.

By the 2000s, Playboy was a full-scale media and lifestyle brand that spanned across TV, radio, and even the internet. It also held a variety of real estate properties. The decline of the physical publishing industry dropped the magazine’s subscriber base down to 800,000 by 2015.

Playboy still held lavish parties, but its risqué content risked becoming irrelevant in the internet age, and the Spring issue in March 2020 was the final issue.

Coming full circle, Playboy is now in the NFT business and selling Rabbitars to adjust to a younger Gen Z audience.

Digitizing a Media Empire

Letting go of the magazine didn’t happen until Hef’s death, but Playboy eventually reorganized in 2020 into four market segments:

• Sexual Wellness,
• Style & Apparel,
• Gaming & Lifestyle, and
• Beauty & Grooming.

Over 90 percent of the company’s 2020 revenue came from the first two categories, which include lingerie, CBD, and licensed fashion sales globally.

Its three reportable segments are categorized by Licensing, Direct-to-Consumer, and Digital Subscriptions and Content. That includes trademark licensing to games and apps, along with any digital subscription sales.

Playboy is also highly active on social media, and you’ll even occasionally find them on social audio platforms like Clubhouse and Twitter Spaces. Being on the cutting edge of technology is one thing, but the company also understands e-commerce and sexual wellness, as evidenced by its acquisitions of Yandy and Lovers over the past two years.

Let’s break down how profitable the company really is.

How Much Money Playboy Makes

Playboy’s third quarter financial report showed a 67 percent year-over-year increase in revenue at $58.4 million. That translates to $150.9 million in revenue for the first nine months of the year.

Still, it’s operating at a loss of over $21.61 million for that period; it spent a modest $1 million in related party expenses through the pandemic’s worst quarantine period.

The company holds about $132.34 million in current assets, with $849.4 million in total assets. Total debt stands at $451.8 million. If it can keep that debt manageable higher profitability is eminently possible.

Already it tripled in value in its first year back on the public market since Hef’s death. And its strong Q3 earnings proved it could double over again by next year. That will require a lot of things to go right though.

Playboy Forecast

Although the magazine is past its shelf life, the Playboy bunny logo and brand licensing are timeless. They reach across a variety of age groups young and old, and it’s especially popular on men’s fashion in China.

It’s the company’s NFT drop that got investors excited about it moving into the next year though. The ERC-721 tokens are hosted on the InterPlanetary File System (IPFS), and it’s part of the company’s attempt to replicate the old-school Playboy keys to give hodlers entry into the virtual Playboy club.

With the deep archive of art, celebrity, and culture owned by the company, there’s no telling how it could monetize in the metaverse. What’s clear, though, is the company is dedicated to exploring those innovative new frontiers.

This could prove fruitful and boost Playboy share price. Absent them, Playboy has a dubious future given its competitors in digital media push the boundaries much further and command an enormous audience in so doing; in short Playboy market share is tough to sustain.

Is Playboy Stock a Buy: The Bottom Line

Playboy was founded as a provocative men’s magazine that set a high bar with its mix of culture, politics, and nude photos of celebrities and models. The company became iconic long before internet porn and the web in general destroyed the magazine. But the company’s licenses and merch businesses are still making money.

It has a strong global presence in markets like China, and if it can continue strengthening its ecommerce capabilities and improve margins, it has the potential to increase profitability substantially.

Ultimately, the mixture of media and live events is the winning formula for this lifestyle brand. How timeless that brand proves to be in the long term is unknown, but it has already tripled profits for investors who believed in its SPAC launch.

If you’re a fan of Playboy, either the NFTs or the stock could be a great investment to add to your portfolio.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.