The Global Casino: An Introduction to Environmental Issues
The Global Casino: An Introduction to Environmental Issues
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Edit 1: More ARKQ buying today (~50k shares). Thank you everyone for the positive feedback and discussion! Bottom Line Up Front (BLUF) or TL;DR for the non-military types: LMT is a good target if you want to literally go to the moon, and my PT is $690.26 in two years (more than 2x from current levels). Justification and some possible trade ideas are listed below, just CTRL-F “Trade Ideas”. I hope you guys enjoy this work and would appreciate any discussion or feedback. I hope to catch you in the comments. Team, We interrupt today’s regularly scheduled short squeeze coverage to discuss a traditionally boring stock, LMT (Lockheed Martin), with significant upside potential. To be clear, this is NOT a short squeeze target like many reddit posts are keying on. I hope that this piece sparks discussion, but if you are just looking for short squeeze content, all I have to say is BUY, HOLD, and GODSPEED. The source of inspiration for me writing this piece is threefold; first, retail investors are winning, and I believe that we will continue to win if we continue to identify opportunities in the market. In my view, the stock market has always been a place for the public to shine a light on areas of innovation that real Americans are excited about and proud to be a part of. Online communities have stolen the loudspeaker from hedge fund managers and returned it to decentralized online democracies that quickly and proudly shift their weight behind ideas they believe in. In GME’s case, it was a blatant smear campaign to destroy a struggling business. I think that we should continue this campaign by identifying opportunities in the market and running with them. It may sound overly idealistic, but if reddit can take on the hedge funds, I non-ironically believe that we can quite literally take good companies researching space technology to the moon. I think LMT may be one of several stocks to help get us there. Second, a video where the Secretary of State of Massachusetts argues that internet boards are full of a bunch of unsophisticated, thoughtless traders really ticked me off. This piece is designed to show that ‘the little guy’ is ready to get into the weeds, understand business plans, and outpace analysts that think companies like Tesla are overvalued by comparing them to Toyota. That is a big reason that I settled on an old, large, slow growth company to do a deep-dive on, and try my best to show some of the abysmal predictive analysis major ‘research firms’ do on even some of the most heavily covered stocks. LMT is making moves, and the suits on wall street are 10 steps behind. At the time of writing this piece, Analyst Estimates range from 330-460 (what an insane range). Third, and most importantly, I am in the US military, and I think that it is fun to go deep into the financials of the defense sector. I think that it helps me understand the long-term growth plans of the DoD, and I think that I attack these deep-dives with a perspective that a lot of these finance-from-day-one cats do not understand. Even if no one ever looks at this work, I think that taking the time to write pieces like this makes me a better Soldier, and I will continue to do it in my spare time when I am feeling inspired. I wrote a piece on Raytheon Technologies (Ticker: RTX) 6 months ago, and I think it was well-received. I was most convicted about RTX in the defense sector, but I have since shifted to believing LMT is the leader in the defense space. I am long both, though. If this inspires anyone else to do similar research on other companies, or sparks discussion in the community, that is just a bonus. Special shout-out to the folks that read more than just the TL;DR, but if you do just read the TL;DR, I love you too! Now let us get into it: Leadership I generally like to invest in companies that are led by people that seem to have integrity. Jim Taiclet took the reins at LMT in June of last year. While on active duty, he served as a C-141B Starlifter pilot (a retired LMT Aircraft). After getting out he went to work for the American Tower Corporation (Ticker: AMT). His first day at American Tower was September 10, 2001. The following day, AMT lost 13 employees in the World Trade Center attack. He stayed with the company, despite it being decimated by market uncertainty in the wake of 9/11. He was appointed CEO of the very same company in 2004. Over a 16 year tenure as CEO of AMT the company market cap 20x’d. He left his position as CEO of AMT in March of last year, and the stock stagnated since his departure, currently trading at roughly the same market cap as to when he left. Jim Taiclet was also appointed to be the chairman of the board this week, replacing the previous CEO. Why is it relevant that the CEO came from a massive telecommunications company? Rightfully, Taiclet’s focus for LMT is bringing military technology into the modern era. He wants LMT to be a first mover in the military 5G space, military application of AI space, the… space space, and the hypersonic glide vehicle (HGV) space. These areas are revolutionary for the boomer defense sector. We will discuss this in more detail later when we cover the company’s P/E multiple and why it is absolute nonsense. It is not a surprise to me that they brought Taiclet on during the pandemic. He led AMT through adversity before, and LMT’s positioning during the pandemic is tremendous relative to the rest of the sector, thanks in large part to some strong strategic moves and good investments by current and past leadership. I think that Taiclet is the right CEO for the job. In addition to the new CEO, the new Secretary of Defense, Secretary Lloyd Austin, has strong ties to the defense sector. He was formerly a board member for RTX. He is absolutely above reproach, and a true leader of character, but I bring this up not to suggest that he will inappropriately serve in the best interest of defense contractors, but to suggest that he speaks the language of these companies effectively. I do not anticipate that the current administration poses as significant of a risk to the defense sector as many analysts seem to believe. This will be expanded in the headwinds section below. SPACE Cathie Wood and the ARK Invest team brought a lot of attention to the space sector when the ARKX, The ARK Space Exploration ETF, Form N-1A was officially filed through the SEC. More recently, ARK Invest published their Big Ideas 2021 Annual Report and dedicated an entire 7-page chapter to Orbital Aerospace, a new disruptive innovation platform that the ARK Team is investigating. This may have helped energize wall street to re-look their portfolios and their investments in space technology, but it was certainly not the first catalyst that pushed the defense industry in the direction of winning the new space race. In June 2018, then President Trump announced at the annual National Space Council that “it is not enough to merely have an American presence in space, we must have American dominance in space. So important. Therefore, I am hereby directing the Department of Defense (DoD) and Pentagon to immediately begin the process necessary to establish a Space Force as the sixth branch of the Armed Forces". Historically, Department of Defense space assets were under the control of the Air Force. By creating a separate branch of service for the United States Space Force (USSF), the DoD would allocate a Chairman of Space Operations on the Joint Chiefs of Staff and clearly define the budget for space operations dedicated directly to the USSF. At present, this budget is funneled from the USAF’s budget. The process was formalized in December of 2019, and the DoD has appropriated ~$15B to the USSF in their first full year of existence according to the FY21 budget. Among the 77 spacecraft that are controlled by the USSF, 29 of them are Lockheed Martin GPS satellites, 6 of them are Lockheed Martin Space-Based Infrared Systems (SBIRS), and LMT had a hand in creating and/or manufacturing for several of the other USSF efforts. The Next Generation Overhead Persistent Infrared Missile Warning Satellites (also known as Next-Gen OPIR) were contracted out to both Northrup Grumman (Ticker: NOC) and LMT. LMT’s contract is currently set at $4.9B, NOC’s contract is set at $2.37B. Tangentially related to the discussion of space is the discussion of hypersonic glide vehicles (HGVs). HGVs have exoatmospheric and atmospheric implications, but I think that their technology is extremely important to driving margins down for both space exploration and terrestrial point-to-point travel. LMT is leading the charge for military HGV research. They hold contracts with the Navy, Air Force, and Army to develop HGVs and hypersonic precision fires. The priority for HGV technology accelerated significantly when Russia launched their Avangard HGV in December of 2019. Improving the technology for HGVs is a critical next-step in maintaining US hegemony, but also maintaining leadership in both terrestrial and exoatmospheric travel. LARGE SCALE COMBAT OPERATIONS (LSCO) The DoD transitioning to Large-Scale Combat Operations (LSCO) as the military’s strategic focus. This is a move away from an emphasis on Counter-Insurgency operations. LSCO requires effective multi-domain operations (MDO), which means effective and integrated strategies regarding land, sea, air, space, and cyberspace. To have effective MDO, the DoD is seeking systems that both expand capabilities against peer threats and increase the ability to track enemy units and communicate internally. This requires a modernizing military strategy that relies heavily on air, missile, and sensor modernization. Put simply, the DoD has decided to start preparing for peer or near-peer adversaries (China, Russia, Iran, North Korea) rather than insurgencies. For this reason, I believe that increased Chinese and Russian tensions are, unfortunate as it may be, a boon to the defense industry. This is particularly true in the missiles/fires and space industry, as peer-to-peer conflicts are won by leveraging technological advantages. There are too many projects to cover in detail, but some important military technologies that LMT is focusing on to support LSCO include directed energy weapons (lasers) to address enemy drone technology, machine learning / artificial intelligence (most applications fall under LMT’s classified budget, but it is easy to imagine the applications of AI in a military context), and 5G to increase battlefield connectivity. These projects are all nested within the DoD’s LSCO strategy, and position LMT as the leader in emergent military tech. NOC is the other major contractor making a heavy push in the modernization direction, but winners win, and I think a better CEO, balance sheet, and larger market cap make LMT the clear winner for aiding the DoD in a transition toward LSCO. SECTOR COMPARISON (BACKLOG) The discussion of LSCO transitions well into the discussion of defense contractor backlogs. Massive defense contracts are not filled overnight, so examining order backlogs is a relatively reliable way to gauge the interest of the DoD in a defense contractor’s existing or emerging products. For my sector comparison, I am using the top 6 holdings of the iShares U.S. Aerospace & Defense ETF (Ticker: ITA). I hate this ETF, and ETFs like it (DFEN) because of their massively outsized exposure to aerospace, and undersized allocation to companies like LMT. LMT is only 18% smaller than Boeing (Ticker: BA) but is only 30.4% of the exposure of BA (18.46% of the fund is BA, only 5.62% of the fund is LMT). Funds of this category are just BA / RTX hacks. I suggest building your own pie on a site like M1 Finance (although they are implicated in the trade restriction BS… please be advised of that… hoping other brokerages that are above board will offer similar UIs like the pie design… just wanted to be clear there) if you are interested in the defense sector. The top 6 holdings of ITA are: Boeing Company (Ticker: BA, MKT CAP $110B) at 18.46% Raytheon Technologies (Ticker: RTX, MKT CAP $101B) at 17.84% Lockheed Martin (Ticker: LMT, MKT CAP $90B) at 5.62% General Dynamics Corporation (Ticker: GD, MKT CAP $42B) 4.78% Teledyne Technologies Incorporated (Ticker: TDY, MKT CAP $13B) at 4.74% Northrop Grumman Corporation (Ticker: NOC, MKT CAP $48B) at 4.64% As a brief aside, please look at the breakdowns of ETFs before buying them. The fact that ITA has more exposure to TDY than NOC and L3Harris is wild. Make sector ETFs balanced how you want them to be balanced and it will be more engaging, and you will likely outperform. I digress. Backlogs for defense companies can easily be pulled from their quarterly reports. Here are the current backlogs in the same order as before, followed by a percentage of their backlog to their current market cap. All numbers are pulled from January earning reports unless otherwise noted with an * because they are still pending. Boeing Company backlog (Commercial: $282B, Defense: $61B, Foreign Military Sales (FMS, categorized by BA as ‘Global’): 21B, Total Backlog 364B): BA’s backlog to market cap is a ratio of 3.32, which is strong, but most of that backlog comes from the commercial, not the defense side. Airlines have been getting decimated, I am personally not interested in having much of my backlog exposed to commercial pressures when trying to invest in a defense play. Without commercial exposure, their defense only backlog ratio is .748. This is extremely low. I understand that this does not do BA justice, but I am keying in on defense exposure, and I am left thoroughly unsatisfied by that ratio. Also, we have seen several canceled contracts already on the commercial side. Raytheon Technologies backlog (Defense backlog for all 4 subdivisions: 67.3B): Raytheon only published a defense backlog in this quarter’s report. That is further evidence to me that the commercial aerospace side of the house is getting hammered. They have a relatively week backlog to market cap as well, putting them at a ratio of .664, worse off than the BA defense backlog. Lockheed Martin backlog (Total Backlog: $147B): This backlog blows our first two defense backlogs out of the water with a current market cap to backlog ratio of 1.63. General Dynamics Corporation backlog (Total Backlog: $89.5B, $11.6B is primarily business jets, but it is difficult to determine how much of their aerospace business is commercial): Solid 2.13 ratio, still great 1.85 if you do not consider their aerospace business. The curveball here for me is that GD published a consolidated operating profit of $4.1B including commercial aerospace, whereas LMT published a consolidated operating profit of $9.1B. This makes the LMT ratio of profit/market cap slightly in favor of LMT without accounting for the GD commercial aerospace exposure. This research surprised me; I may like GD more than I originally assumed I would. Still prefer LMT. Teledyne Technologies Incorporated backlog (Found in the earnings transcript, $1.7B): This stock is not quite in the same league as the other major contractors. This is an odd curveball that a lot of the defense ETFs seem to have too much exposure to. They have a weak backlog, but they are a smaller growing company. I am not interested in this at all. It has a backlog ratio of .129. Northrop Grumman Corporation backlog ($81B): Strong numbers here. I see NOC and LMT as the two front-runners in the defense sector. I like LMT more because I like their exposure to AI, 5G, and HGVs more than NOC, but I think this is a great alternative to LMT if you like the defense sector. Has a ratio of 1.69, slightly edging out LMT on this metric. LMT edges out NOC on margins by ~.9%, though, which has significant implications when considering the depth of the LMT backlog. The winners here are LMT, GD, and NOC. BA is attractive if you think anyone will have enough money to buy new planes. BA and RTX are both getting hammered by commercial aerospace exposure right now and are much more positioned as recovery plays. That said, LMT and NOC both make money now, and will regardless of the impact of the pandemic. LMT is growing at a slightly faster rate than NOC. Both are profit machines, but I like LMT’s product portfolio and leadership a lot more. FREE CASH FLOW Despite the pandemic, LMT had the free cash flow to be able to pay a $2.60 per share dividend. This maintains their ~3% yearly dividend rate. They had a free cash flow of $6.4B. They spent $3.9 of that in share repurchases and dividend payouts. That leaves 40% of that cash to continue to strengthen one of the most stalwart balance sheets outside of big tech on the street. Having this free cash flow allowed them to purchase Aerojet Rocketdyne for $4.4B in December. They seem flexible and willing to expand and take advantage of their relative position during the pandemic. This is a stock that has little downside risk and significant upside potential. It is always reassuring to me to know that at the end of the day, a company is using its profit to continue to grow. HEADWINDS New Administration – This is more of an unknown than a headwind. The Obama Administration was not light on military spending, and the newly appointed SecDef is unlikely to shy away from modernizing the force. Military defense budgets may get lost in the political shuffle, but nothing right now suggests that defense budgets are on the chopping block. Macroeconomic pressure – The markets are tumultuous in the wake of GME. Hedgies are shaking in their boots, and scared money weighed on markets the past week. If scared money continues to exert pressure on the broader equity markets, all boomer stocks are likely weighed down by slumping markets. Non-meme Status – The stocks that are impervious to macroeconomic pressures in the above paragraph are the stonks that we, the people, have decided to support. From GME to IPOE, there is a slew of stonks that are watching and laughing from the green zone as the broader markets slip deeper into the red zone. Unless sentiment about LMT changes, I see no evidence that LMT will remain unaffected by a broader economic downturn (despite showing growth YoY during a pandemic). TAILWINDS Aerojet Rocketdyne to the Moon – Cathie Wood opened up a $39mil position in LMT a few weeks ago, and this was near the announcement of ARKX. The big ideas 2021 article focuses heavily on satellite technology, deep learning, and HGVs. I think that the AR acquisition suggests that vertical integration is a priority for LMT. They even fielded a question in their earnings call about whether they were concerned about being perceived as a monopoly. Their answer was spot on—the USFG and DoD have a vested interest in the success of defense companies. Why would they discourage a defense contractor from vertical integration to optimize margins? International Tensions – SolarWinds has escalated US-Russia tensions. President Biden wants to look tough on China. LSCO is a DoD-wide priority. 5G.Mil – We still do not have a lot of fidelity on what this looks like, but the military would benefit in a lot of ways if we had world-wide access to the rapid transfer of encrypted data. Many units still rely on Vietnam-era technology signal technology with abysmal data rates. There are a lot of implications if the code can be cracked to win a DoD 5G contract. TRADE IDEAS Price Target: LMT is currently at a P/E of ~14. Verizon has roughly the same. LMT’s 5-year P/E ratio average is ~17. NOC is currently at a P/E of ~20. TSLA has a P/E Ratio of 1339 (disappointingly not 1337). P/E is a useless metric because no one seems to care about it. My point is that LMT makes a lot of money, and other companies that are valued at much higher multiples do not make any money at all. LMT’s P/E ratio is that of a boomer stock that has no growth potential. LMT’s P/E is exactly in line with the Aerospace and Defense Industry P/E ratio standard. LMT’s new CEO is pushing the industry in a new direction. I will arbitrarily choose a P/E ratio of 30, because it is half of the software industry average, and it is a nice round number. Plus, stock values are speculative and nonsense anyway. Share price today: $321.82 Share price based on LMT average 5-year P/E: $384.08 (I see this as a short term PT, reversion to the mean) Share price with a P/E of 30: $690.26 Buy and Hold: Simple. Doesn’t take much thought. Come back in a year or two and be happy with your tendies (and a few dividends to boot). LEAPS Call Debit Spread (Based on last trade prices): Buy $375 C 20 JAN 23 for $26.5, Sell $450 C 20 JAN 23 for $12. Total Cost $14.5 for a spread width of $75. Max gain 517% per spread. Higher risk strategy. LEAPS: Buy $500 C 20 JAN 23 for $7.20. Very high-risk strat. If the price target is hit within two years, these would be in the money $183 per contract for a gain of 2500%. This is the casino strat. SOURCES https://www.lockheedmartin.com/en-us/news/features/2020/james-taiclet-from-military-pilot-to-successful-ceo.html https://www.warren.senate.gov/newsroom/press-releases/in-response-to-senator-warrens-questions-secretary-of-defense-nominee-general-lloyd-austin-commits-to-recusing-himself-from-raytheon-decisions-for-four-years https://news.lockheedmartin.com/2019-08-30-Lockheed-Martins-Expertise-in-Hypersonic-Flight-Wins-New-Army-Work https://www.lockheedmartin.com/en-us/capabilities/hypersonics.html https://research.ark-invest.com/hubfs/1_Download_Files_ARK-Invest/White_Papers/ARK%E2%80%93Invest_BigIdeas_2021.pdf?hsCtaTracking=4e1a031b-7ed7-4fb2-929c-072267eda5fc%7Cee55057a-bc7b-441e-8b96-452ec1efe34c https://www.deseret.com/2018/6/19/20647309/twitter-reacts-to-trump-s-call-for-a-space-force https://comptroller.defense.gov/Portals/45/Documents/defbudget/fy2021/fy2021_Budget_Request_Overview_Book.pdf https://www.airforcemag.com/lockheed-receives-up-to-4-9-billion-for-next-gen-opir-satellites/ https://spacenews.com/northrop-grumman-gets-2-3-billion-space-force-contract-to-develop-missile-warning-satellites/ https://www.lockheedmartin.com/en-us/capabilities/directed-energy/laser-weapon-systems.html https://emerj.com/ai-sector-overviews/lockheed-martins-ai-applications-for-the-military/ https://www.defenseone.com/business/2020/07/new-ceo-wants-lockheed-become-5g-playe167072/ https://www.wsj.com/articles/defense-firms-expect-higher-spending-11548783988 https://www.etf.com/ITA#efficiency https://s2.q4cdn.com/661678649/files/doc_financials/2020/q4/4Q20-Presentation.pdf https://investors.rtx.com/static-files/dfd94ff7-4cca-4540-bc4b-4e3ba92fc646 https://investors.lockheedmartin.com/static-files/64e5aa03-9023-423a-8908-2aae8c7015ac https://s22.q4cdn.com/891946778/files/doc_financials/2020/q4/GD_4Q20_Earnings_Highlights-Outlook-Final.pdf https://www.fool.com/earnings/call-transcripts/2021/01/27/teledyne-technologies-inc-tdy-q4-2020-earnings-cal/ https://investor.northropgrumman.com/static-files/6e6e117f-f656-4c68-ba7f-3dc53c2dd13a
The #1 online casino company $RSI is primed for autism
Positions: $RSI 30 03/19 30C Proof: https://imgur.com/a/swCCMjz *This post is for informational purposes only, you should not construe any such information or other material as investment, financial, or other advice.* TLDR: Rush Street Interactive ($RSI) is the #1 nationwide online casino company and the #3 or #4 sports book depending on the state. Short selling, unwarranted institutional wariness of share dilution and the general market focus on sports book instead of online casino has left $RSI grossly undervalued. A massive blow out at Q4 earnings will result in analyst upgrades and a rapid repricing by market makers and institutions seeking exposure to the emerging sector. **Overview** "Sports book is really just kind of a warm up in a lot of ways for an online casino where the real money is made" - Niccolo De Masi, CEO dMY technologies Rush Street Interactive ($RSI) operates the BetRivers.com online casino and sports book. They are now fully licensed and operating in New Jersey, Pennsylvania, Michigan, Illinois, Indiana, Colorado, Iowa, and Virginia. They own and operate a casino in New York and already have a New York license making them well positioned for liberalization there. They merged with a dMY Technology Group SPAC on Dec. 31st 2020 with 240 million on the balance sheet to spend on growth. The online casino business is fundamentally more profitable than sports betting because the average value of a casino player is estimated at $600 while a sports book player could be as little as $20. Estimates put the online casino market at DOUBLE the size of the online sports book market and the online casino industry is really just getting started as more states liberalize. $RSI is expert at new market entry; they have been first to market in Pennsylvania, Illinois, Indiana, and Colorado and even when they aren't first they are capable of capturing market share in competitive markets such as New Jersey. They also have products which women play which accounts for at least half of the market in online casino. The female market is one that the pure sports book plays miss out on. Also for some fucking reason they operate a casino and sports book in Colombia (rushbet.co) and may make large expansions into other parts of south America as legalization continues. This means they have the expertise necessary for global expansion in the future although the states remains their primary focus and growth driver. **The Financials and Strategy** Unlike other companies in the space Rush Street is already profitable in 2020 and has a strong focus on Return On Invested Capital (ROIC). Q3 gross revenue was $71.9 Million. Q4 revenue is going to be a blow out. Combing through state gambling revenue data and breaking that down by market share my estimate is that Q4 revenue could be as high as $120 Million. Paired with this blow out will be a **guidance raise to $500 Million for 2021**, which is 2/3 of DraftKings 2021 guidance of $750M. https://imgur.com/a/xkfcayC What is striking when compared to $DKNG is that their advertising spend was only a quarter of revenue in Q3 while $DKNG spent 155% of their revenue. This will change as they begin to focus on growth, but it shows they are very good at getting return on ad spend. This company should actually be valued close to $DKNG based on growth potential once guidance is raised. https://imgur.com/a/RQQXtGg Their focus on attracting **female gamers** is also important to their long term growth potential. The sports book plays with cross sells to casino such as $DKNG will not be able to grow through the female demographic in the same way. **This cannot be understated** as one of the major strategic advantages of $RSI. https://imgur.com/a/xzJj26n As I said before I expect their trend of rapid growth to continue for Q4 earnings, certainly going to be a blow out based on looking at state gambling revenue numbers. My estimate is that their revenue will be around 110M for Q4. I also expect guidance to be raised to 500M for 2021 due to strong performance in existing markets and the recently opened Michigan market as well as their sports book launch in Virginia. https://imgur.com/a/ckTqHhh **Short sellers have entered the chat** The short interest on $RSI sits at 5.08 M shares as of 01/14/21 representing a 30% increase. Now why would a company already valued at 2.8 Billion and with a comparative valuation of 8-10 Billion compared with $DKNG and $PENN be so heavily shorted at such a low market cap? My conclusion is that an institution with 10s of millions to throw at shorting this stock wants to take advantage of fear of share dilution from warrant calling or to establish a better entry prior to earnings. **Commander in GILF Cathie Wood is Bullish on the sector** On Feb. 2nd ARK disclosed that they had purchased 620,300 shares of $DKNG. This is extremely bullish for the sector. I am highly confident that after Q4 earnings ARK will be purchasing shares in $RSI as well due its strategic advantages relative to $DKNG and exposure to the female demographic. For such a small market cap company this will be a major catalyst. **Institutions are bullish** Fidelity has increased their holdings to 14% as of today: https://d18rn0p25nwr6d.cloudfront.net/CIK-0001793659/8f10b0d8-a3d2-447c-bc75-87587d0a4670.pdf Alliance Bernstein holds a 6% position reported today: http://d18rn0p25nwr6d.cloudfront.net/CIK-0001793659/e883778d-e759-4a85-91c1-3242ed110720.pdf **Final notes** Jerome "The Bus" Bettis, Steelers legend and hall of fame running back, is their brand ambassador... This company knows their target audience and how to appeal to them, likely more 'classic' ambassadors to come to attract even more boomer and Gen X degenerates. Keep in mind these are the gamblers with big money to spend, the average age of an online casino gambler is 42. This stock has been grossly underpriced due to short selling. The terms of the SPAC deal were not unfavorable and all the insiders held their shares through the merger banking on growth in the market - **management owns 77% of the company**. This is a true value play on a well managed company in an emerging industry with a market size in the hundreds of billions. I plan to hold shares long term. I will post a part 2 breaking down their latest S-1 filing and Q4 revenue by state when they release their Q4 earnings date. Do your own research. References: https://www.legalsportsreport.com/sports-betting/revenue/ https://fintel.io/doc/sec-rush-street-interactive-inc-ex991-2021-january-05-18632-947 https://s26.q4cdn.com/794539746/files/doc_presentations/2020/RSI-Investor-Presentation-15-Oct-2020.pdf https://ir.rushstreetinteractive.com/news/news-details/2020/RUSH-STREET-INTERACTIVE-ANNOUNCES-THIRD-QUARTER-2020-RESULTS-AND-RAISES-FULL-YEAR-GUIDANCE/default.aspx https://www.youtube.com/watch?v=SQWEhWuPmzU https://www.thestreet.com/investing/draftkings-surges-as-stake-bought-by-ark-next-generation Positions: $RSI 30 03/19 30C I will be adding 04/16 25cs each week until earnings. Exit strategy: "What's an exit strategy?" - u/deepfuckingvalue Update 021321: IMPORTANT after a commenter pointed out that technically they could report as late as April 2nd I AM RECOMMENDING THAT EVERYONE ROLL OUT TO APRIL 16TH 35Cs
The #1 online casino company $RSI is primed for ingress.
Positions: $RSI 03/19 30C Proof: https://imgur.com/a/swCCMjz This post is for informational purposes only, you should not construe any such information or other material as investment, financial, or other advice. TLDR: Rush Street Interactive ($RSI) is the #1 nationwide online casino company and the #3 or #4 sports book depending on the state. Short selling, unwarranted institutional wariness of share dilution and the general market focus on sports book instead of online casino has left $RSI grossly undervalued. A massive blow out at Q4 earnings will result in analyst upgrades and a rapid repricing by market makers and institutions seeking exposure to the emerging sector. Overview "Sports book is really just kind of a warm up in a lot of ways for an online casino where the real money is made" - Niccolo De Masi, CEO dMY technologies Rush Street Interactive ($RSI) operates the BetRivers.com online casino and sports book. They are now fully licensed and operating in New Jersey, Pennsylvania, Michigan, Illinois, Indiana, Colorado, Iowa, and Virginia. They own and operate a casino in New York and already have a New York license making them well positioned for liberalization there. They merged with a dMY Technology Group SPAC on Dec. 31st 2020 with 240 million on the balance sheet to spend on growth. The online casino business is fundamentally more profitable than sports betting because the average value of a casino player is estimated at $600 while a sports book player could be as little as $20. Estimates put the online casino market at DOUBLE the size of the online sports book market and the online casino industry is really just getting started as more states liberalize. $RSI is expert at new market entry; they have been first to market in Pennsylvania, Illinois, Indiana, and Colorado and even when they aren't first they are capable of capturing market share in competitive markets such as New Jersey. They also have products which women play which accounts for at least half of the market in online casino. The female market is one that the pure sports book plays miss out on. Also for some fucking reason they operate a casino and sports book in Colombia (rushbet.co) and may make large expansions into other parts of south America as legalization continues. This means they have the expertise necessary for global expansion in the future although the states remains their primary focus and growth driver. The Financials and Strategy Unlike other companies in the space Rush Street is already profitable in 2020 and has a strong focus on Return On Invested Capital (ROIC). Q3 gross revenue was $71.9 Million. Q4 revenue is going to be a blow out. Combing through state gambling revenue data and breaking that down by market share my estimate is that Q4 revenue could be as high as $120 Million. Paired with this blow out will be a **guidance raise to $500 Million for 2021**, which is 2/3 of DraftKings 2021 guidance of $750M. https://imgur.com/a/xkfcayC What is striking when compared to $DKNG is that their advertising spend was only a quarter of revenue in Q3 while $DKNG spent 155% of their revenue. This will change as they begin to focus on growth, but it shows they are very good at getting return on ad spend. This company should actually be valued close to $DKNG based on growth potential once guidance is raised. https://imgur.com/a/RQQXtGg Their focus on attracting **female gamers** is also important to their long term growth potential. The sports book plays with cross sells to casino such as $DKNG will not be able to grow through the female demographic in the same way. **This cannot be understated** as one of the major strategic advantages of $RSI. https://imgur.com/a/xzJj26n As I said before I expect their trend of rapid growth to continue for Q4 earnings, certainly going to be a blow out based on looking at state gambling revenue numbers. My estimate is that their revenue will be around 110M for Q4. I also expect guidance to be raised to 500M for 2021 due to strong performance in existing markets and the recently opened Michigan market as well as their sports book launch in Virginia. https://imgur.com/a/ckTqHhh Short sellers have entered the chat The short interest on $RSI sits at 5.08 M shares as of 01/14/21 representing a 30% increase. Now why would a company already valued at 2.8 Billion and with a comparative valuation of 8-10 Billion compared with $DKNG and $PENN be so heavily shorted at such a low market cap? My conclusion is that an institution with 10s of millions to throw at shorting this stock wants to take advantage of fear of share dilution from warrant calling or to establish a better entry prior to earnings. Cathie Wood is Bullish on the sector On Feb. 2nd ARK disclosed that they had purchased 620,300 shares of $DKNG. This is extremely bullish for the sector. I am highly confident that after Q4 earnings ARK will be purchasing shares in $RSI as well due its strategic advantages relative to $DKNG and exposure to the female demographic. For such a small market cap company this will be a major catalyst. Final notes Jerome "The Bus" Bettis, Steelers legend and hall of fame running back, is their brand ambassador... This company knows their target audience and how to appeal to them, likely more 'classic' ambassadors to come to attract even more boomer and Gen X degenerates. Keep in mind these are the gamblers with big money to spend, the average age of an online casino gambler is 42. This stock has been grossly underpriced due to short selling. The terms of the SPAC deal were not unfavorable and all the insiders held their shares through the merger banking on growth in the market - **management owns 77% of the company**. This is a true value play on a well managed company in an emerging industry with a market size in the hundreds of billions. I plan to hold shares long term. I will post a part 2 breaking down their latest S-1 filing and Q4 revenue by state when they release their Q4 earnings date. Do your own research. References: https://www.legalsportsreport.com/sports-betting/revenue/ https://fintel.io/doc/sec-rush-street-interactive-inc-ex991-2021-january-05-18632-947 https://s26.q4cdn.com/794539746/files/doc_presentations/2020/RSI-Investor-Presentation-15-Oct-2020.pdf https://ir.rushstreetinteractive.com/news/news-details/2020/RUSH-STREET-INTERACTIVE-ANNOUNCES-THIRD-QUARTER-2020-RESULTS-AND-RAISES-FULL-YEAR-GUIDANCE/default.aspx https://www.youtube.com/watch?v=SQWEhWuPmzU https://www.thestreet.com/investing/draftkings-surges-as-stake-bought-by-ark-next-generation Positions: $RSI 03/19 30C I will be adding 04/16 25Cs each week until earnings Exit strategy: "What's an exit strategy?" - u/deepfuckingvalue Forgot to add: http://d18rn0p25nwr6d.cloudfront.net/CIK-0001793659/8f10b0d8-a3d2-447c-bc75-87587d0a4670.pdf Fidelity just doubled their position to almost 15% Update 021221: Everyone that went in on my initial entry is down 40% right now. As I said I plan to continue to buy 03/19 25Cs each week until earnings. If you’re worried about further losses wait until the day before earnings to load up, you may miss a run up though. Update 021321: IMPORTANT after a commenter pointed out that technically they could report as late as April 2nd I AM RECOMMENDING THAT EVERYONE ROLL OUT TO APRIL 16TH 35Cs
In Theaters Near You: An In-Depth AMC Analysis [Response to CNBC] [DD] 🚀🚀🌕
THANK YOU MODS FOR LETTING THIS THROUGH! Please click HERE for the PDF version if you would like to download the dd. (credit: research compiled by IG:@wydstockbros) To get things started, I'm not a financial advisor, I'm not a bot, and this one goes out to you, Chamath. --- tl;dr AMC is the global leader in a $17 billion dollar industry that’s been beaten senseless to the ground with so much room to run. After pioneering deals with streaming services, buying out their competition, and upgrading their facilities worldwide, 80% short interest is highly inappropriate for its TRUE fundamental value — $69.69 a share. 🚀🚀🚀🚀🚀🚀$AMC TO $69.69🚀🚀🚀🚀🚀🚀 🚀🚀🚀🚀🚀🚀$AMC TO THE MOON🚀🚀🚀🚀🚀🚀 --- "I'm questioning whether they[WSB] are actually doing the research when it comes to things like GameStop and AMC ..." - cluelessCNBC dude. I fuckin miss movies. And when I say movies, I mean the whole damn experience. I wanna buy my $15 popcorn, pour an ungodly amount of butter and jalapenos on that shit and munch in a recliner seat watching in laser 4k quality. I like this company. I like this stock. For the past few days, I've been scouring Google for news articles and company data. I've also been trying to find some detailed DD in here but they’ve all been pretty limp-dick when it came to AMC. And most of the news articles I've read were surface-level AT BEST with a grim outlook based on first-glance analysis. Guess these analysts are just too damn lazy to dig deep. Because when we dive into these issues, we can easily see that the theater giant may not be in as bad a situation as the media/analysts are claiming. In fact, I believe that AMC is absolutely misunderstood, overlooked, andundervalued. Here is why I am more confident than ever that $AMC will not only reach $30 but is in the perfect setup to see ATHs and WELL ABOVE.
I. Ugly Start, Beautiful Setup
Chances are if you are currently holding a significant position in $AMC, then most likely you've already read up on the company and its current standing in the cinema industry. You've probably read about how the corporation has nearly $5 billion dollars worth of debt with many of its locations still closed as the pandemic remains a global issue. You may have realized that new movies haven't been coming out. But more than that, you're seeing that movies are just being released on streaming platforms anyway. You might be concerned for AMC, or even the industry as a whole. All of these concerns are very valid and based on real uncertainty, but let's break down each of these points and see if they’re as bad as analysts claim.
II. A Discussion on Debt
Media outlets keep honing in on this debt like it’s an ugly scar of the corporation. But what we need to focus on is why that debt came to be, how the money was spent, and how this debt was a strategic play in order to cement AMC into the new era of cinema-streaming. We can categorize the money used into four parts:
New equipment and amenities
Lease payments
Maintenance costs (utilities, wages, etc.)
Expansion (buying out the competition)
Pay close attention to the last category because this one is important. Over the past five years, AMC has been acquiring smaller theater companies like Odeon. After buying out these companies, AMC then had to suit its "new locations" with the standard luxury amenities AMC is known for. This makes for a significant bulk of their debt totaling over $3 billion in just acquisitions. This was the investment that helped solidify AMCs spot as the world's largest cinema chain. On the topic of maintenance costs, AMC managed to raise enough money to get through 2021. With ongoing news of vaccines, we can hope their efficacy leads to a speedy reopening near mid-late 2021. But when the economy does reopen—and AMC is back at full operation—what will it look like?
III. The Future of AMC
There's an elephant here.. right in this very room. Yes, streaming and cinema have had some serious beef in the past. In fact, some cinema chains are having tensions with streaming to this day. But what has AMC done in regards to streaming? They were the first to settle deals in order to partner up and take part in streaming revenue. Yup, you read that right. AMC is both having their cake and eating it too. Why would motion picture companies do this? Why not just end the cinema industry? To put simply, analysts are deeply underestimating the value of the "cinema experience". Just as I mentioned in the intro, I miss the cinemas. But I am definitely not alone. But let's not talk about me and the hypothetical "people'', instead let's talk about research studies. In a 3-year study done in Korea, researchers found that shortening the window of cinema exclusivity and releasing movies on streaming early did not have a significant effect on ticket sales. And though this is a limited study done outside of the US, remember that AMC is a global corporation and these results have a hopeful outlook for the future relationship of cinema-streaming for AMC worldwide. "But wait, you still haven't mentioned what streaming gets out of this?" It's not what streaming "gets out of this" but rather what these motion picture companies maintain in keeping a healthy relationship with cinemas. During the peak heat of the movie theater-streaming feud, AMC halted the showing of Trolls and vowed to never show a Universal Pictures film in its theaters again if they were to continue releasing their films on streaming platforms without a proper cinema-exclusivity window. But today, we can see that the tensions have fallen and both motion picture companies and AMC have found a way to mutually benefit each other. Now besides streaming, AMC has been investing in luxury amenities as seen by their chairs, 4K laser projectors, MERV air filtration, and ultra-surround sound speakers. With so many locations and so many amenities, they are offering full theater rentals with high demand during the pandemic. AMC has further cultivated their century-old movie experience into modern times. And this pandemic didn’t just change their amenities. They had to learn how to cut costs and have more efficient operations in order to survive. This only spells good news for when they emerge with better operations, more money to spend, and higher valuations. So that begs the question, how high can the company's share price go realistically?
IV. Valuation
First, let's look at the Movie Theater industry as a whole in comparison to a few other popular entertainment industries: Movie Theater US Market Size$17.1 billion Casinos US Market Size $15.7 billion Amusement Parks US Market Size $14 billion Music Label Music Production US Market Size $9.4 billion Music Publishing US Market Size $7 billion In the world of entertainment, cinema is a very lucrative business. And, again, who is the largest movie theater chain in the world? Yup, AMC. Clueless CNBC dude mentioned that we retail traders don't trade with a fundamental reason but is there a fundamental reason in shorting a $17 billion dollar industry GLOBAL leader down to its grave? Does AMC deserve to die? I surely don't think so. Now I won't touch upon squeezes in this since I'm sure many of you folk have already read/heard enough about them, but I will leave this quick intuitive article about it. And yes, these shorts can and will be squoze once we have faith in our upper valuations and investors(we) begin buying again. And buy again we will. As many users flee limp-dick Robinhood and join one of the real brokerages, their positions/funds will be settled and ready to trade come next week. Where do you think these angry RH refugees will be putting their investments? That's right, exactly into the positions that RH stopped them from buying last week: which includes $AMC. If you were part of the RH user base and your plays were affected by the blatant market manipulation, it's not only "not too late", but I believe it is an opportune time to BUY. How high can it go then? When will I know it's too late to take a position? So when we talk about valuation, many people fear the uncertainty of a stock rising far past its current value. Well, I think Chamath Palihapitiya said it best: "Everybody that bought that stock is also underwriting how they want to own it." In our current price-action environment, it's not too ridiculous to see how we are forming the foundations for AMC to continue rising beyond ATHs. We are already hitting nearly $16 on the day and rallying +53% while enduring heavy trade restrictions. Who's to say that this passion cannot continue? Now I’m no expert and can’t tell you how high this can go, but I am personally eyeing $69.69 as a target. With so many current factors at play including hype, short covers, and ITM options having to be exercised, this is actually the BEST entrance to manifest its ATH valuation and chart some never before seen territory in its price action. It's like the manifest destiny of stock valuation. In fact, we may never see this opportunity for AMC again if we don't act now and solidify its value upward. At the end of the day, prices are what the buyers/sellers settle upon so WE can pioneer that value if we damn well please. This is what a free market is all about. Will there be people that disagree with this? Sure. Will people continue to short AMC as it goes up? Absolutely. Do I think that AMC being shorted 80% and rising is fair? Really? See section III. But institutions are selling off! Like Silver Lake liquidating their 44m shares. Yes, then the next day $AMC dipped to $7.50 and has since recovered… with AMC $600m less in debt. We all know who is shorting AMC, and I am sick of these hedge funds who think they, alone, can decide whether or not a company is worth a damn.
V. Conclusion - Resurgence
We are at the cusp of AMCs resurgence. Because most of us have been kept from participating in social activities, we can better understand that the public is yearning for a sense of normalcy. Sure we've gone pretty far with just watching movies on our TVs or computers through the pandemic, but that doesn't scratch the itch for many folk. What you're investing into when you invest in AMC is the entire experience in tandem with its new streaming deals. And having been beaten so low—while still holding such great fundamental prospects— its share price is ready to blow up. In the future when “The Deep Squeeze” is turned into a movie, we’ll be a part of history. And you’re going to want to see it on the big screen. -- Position: $50k in calls and shares 🚀🚀🚀🚀🚀🚀$AMC TO $69.69🚀🚀🚀🚀🚀🚀 🚀🚀🚀🚀🚀🚀$AMC TO THE MOON🚀🚀🚀🚀🚀🚀
Playboy going public: Porn, Gambling, and Cannabis
NEW INFO 5 Results from share redemption are posted. Less than .2% redeemed. Very bullish as investors are showing extreme confidence in the future of PLBY. https://finance.yahoo.com/news/playboy-mountain-crest-acquisition-corp-120000721.html NEW INFO 4 Definitive Agreement to purchase 100% of Lovers brand stores announced 2/1. https://www.streetinsider.com/Corporate+News/Playboy+%28MCAC%29+Confirms+Deal+to+Acquire+Lovers/17892359.html NEW INFO 3 I bought more on the dip today. 5081 total. Price rose AH to $12.38 (2.15%) NEW INFO 2 Here is the full webinar. https://icrinc.zoom.us/rec/play/9GWKdmOYumjWfZuufW3QXpe_FW_g--qeNbg6PnTjTMbnNTgLmCbWjeRFpQga1iPc-elpGap8dnDv8Zww.yD7DjUwuPmapeEdP?continueMode=true&tk=lEYc4F_FkKlgsmCIs6w0gtGHT2kbgVGbUju3cIRBSjk.DQIAAAAV8NK49xZWdldRM2xNSFNQcTBmcE00UzM3bXh3AAAAAAAAAAAAAAAAAAAAAAAAAAAA&uuid=WN_GKWqbHkeSyuWetJmLFkj4g&_x_zm_rtaid=kR45-uuqRE-L65AxLjpbQw.1611967079119.2c054e3d3f8d8e63339273d9175939ed&_x_zm_rhtaid=866 NEW INFO 1 Live merger webinar with PLBY and MCAC on Friday January 29, 2021 at 12:00 NOON EST link below https://mcacquisition.com/investor-relations/press-release-details/2021/Playboy-Enterprises-Inc.-and-Mountain-Crest-Acquisition-Corp-Participate-in-SPACInsider-ICR-Webinar-on-January-29th-at-12pm-ET/default.aspx Playboy going public: Porn, Gambling, and Cannabis !!!WARNING READING AHEAD!!! TL;DR at the end. It will take some time to sort through all the links and read/watch everything, but you should. In the next couple weeks, Mountain Crest Acquisition Corp is taking Playboy public. The existing ticker MCAC will become PLBY. Special purpose acquisition companies have taken private companies public in recent months with great success. I believe this will be no exception. Notably, Playboy is profitable and has skyrocketing revenue going into a transformational growth phase. Porn - First and foremost, let's talk about porn. I know what you guys are thinking. “Porno mags are dead. Why would I want to invest in something like that? I can get porn for free online.” Guess what? You are absolutely right. And that’s exactly why Playboy doesn’t do that anymore. That’s right, they eliminated their print division. And yet they somehow STILL make money from porn that people (see: boomers) pay for on their website through PlayboyTV, Playboy Plus, and iPlayboy. Here’s the thing: Playboy has international, multi-generational name recognition from porn. They have content available in 180 countries. It will be the only publicly traded adult entertainment (porn) company. But that is not where this company is going. It will help support them along the way. You can see every Playboy magazine through iPlayboy if you’re interested. NSFW links below: https://www.playboy.com/ https://www.playboytv.com/ https://www.playboyplus.com/ https://www.iplayboy.com/ Gambling - Some of you might recognize the Playboy brand from gambling trips to places like Las Vegas, Atlantic City, Cancun, London or Macau. They’ve been in the gambling biz for decades through their casinos, clubs, and licensed gaming products. They see the writing on the wall. COVID is accelerating the transition to digital, application based GAMBLING. That’s right. What we are doing on Robinhood with risky options is gambling, and the only reason regulators might give a shit anymore is because we are making too much money. There may be some restrictions put in place, but gambling from your phone on your couch is not going anywhere. More and more states are allowing things like Draftkings, poker, state ‘lottery” apps, hell - even political betting. Michigan and Virginia just ok’d gambling apps. They won’t be the last. This is all from your couch and any 18 year old with a cracked iphone can access it. Wouldn’t it be cool if Playboy was going to do something like that? They’re already working on it. As per CEO Ben Kohn who we will get to later, “...the company’s casino-style digital gaming products with Scientific Games and Microgaming continue to see significant global growth.” Honestly, I stopped researching Scientific Games' sports betting segment when I saw the word ‘omni-channel’. That told me all I needed to know about it’s success. “Our SG Sports™ platform is an enhanced, omni-channel solution for online, self-service and retail fixed odds sports betting – from soccer to tennis, basketball, football, baseball, hockey, motor sports, racing and more.” https://www.scientificgames.com/ https://www.microgaming.co.uk/ “This latter segment has become increasingly enticing for Playboy, and it said last week that it is considering new tie-ups that could include gaming operators like PointsBet and 888Holdings.” https://calvinayre.com/2020/10/05/business/playboys-gaming-ops-could-get-a-boost-from-spac-purchase/ As per their SEC filing: “Significant consumer engagement and spend with Playboy-branded gaming properties around the world, including with leading partners such as Microgaming, Scientific Games, and Caesar’s Entertainment, steers our investment in digital gaming, sports betting and other digital offerings to further support our commercial strategy to expand consumer spend with minimal marginal cost, and gain consumer data to inform go-to-market plans across categories.” https://www.sec.gov/Archives/edgadata/1803914/000110465921005986/tm2034213-12_defm14a.htm#tMDAA1 They are expanding into more areas of gaming/gambling, working with international players in the digital gaming/gambling arena, and a Playboy sportsbook is on the horizon. https://www.playboy.com/read/the-pleasure-of-playing-with-yourself-mobile-gaming-in-the-covid-era Cannabis - If you’ve ever read through a Playboy magazine, you know they’ve had a positive relationship with cannabis for many years. As of September 2020, Playboy has made a major shift into the cannabis space. Too good to be true you say? Check their website. Playboy currently sells a range of CBD products. This is a good sign. Federal hemp products, which these most likely are, can be mailed across state lines and most importantly for a company like Playboy, can operate through a traditional banking institution. CBD products are usually the first step towards the cannabis space for large companies. Playboy didn’t make these products themselves meaning they are working with a processor in the cannabis industry. Another good sign for future expansion. What else do they have for sale? Pipes, grinders, ashtrays, rolling trays, joint holders. Hmm. Ok. So it looks like they want to sell some shit. They probably don’t have an active interest in cannabis right? Think again: https://www.forbes.com/sites/javierhasse/2020/09/24/playboy-gets-serious-about-cannabis-law-reform-advocacy-with-new-partnership-grants/?sh=62f044a65cea “Taking yet another step into the cannabis space, Playboy will be announcing later on Thursday (September, 2020) that it is launching a cannabis law reform and advocacy campaign in partnership with National Organization for the Reform of Marijuana Laws (NORML), Last Prisoner Project, Marijuana Policy Project, the Veterans Cannabis Project, and the Eaze Momentum Program.” “According to information procured exclusively, the three-pronged campaign will focus on calling for federal legalization. The program also includes the creation of a mentorship plan, through which the Playboy Foundation will support entrepreneurs from groups that are underrepresented in the industry.” Remember that CEO Kohn from earlier? He wrote this recently: https://medium.com/naked-open-letters-from-playboy/congress-must-pass-the-more-act-c867c35239ae Seems like he really wants weed to be legal? Hmm wonder why? The writing's on the wall my friends. Playboy wants into the cannabis industry, they are making steps towards this end, and we have favorable conditions for legislative progress. Don’t think branding your own cannabis line is profitable or worthwhile? Tell me why these 41 celebrity millionaires and billionaires are dummies. I’ll wait. https://www.celebstoner.com/news/celebstoner-news/2019/07/12/top-celebrity-cannabis-brands/ Confirmation: I hear you. “This all seems pretty speculative. It would be wildly profitable if they pull this shift off. But how do we really know?” Watch this whole video: https://finance.yahoo.com/video/playboy-ceo-telling-story-female-154907068.html Man - this interview just gets my juices flowing. And highlights one of my favorite reasons for this play. They have so many different business avenues from which a catalyst could appear. I think paying attention, holding shares, and options on these staggered announcements over the next year is the way I am going to go about it. "There's definitely been a shift to direct-to-consumer," he (Kohn) said. "About 50 percent of our revenue today is direct-to-consumer, and that will continue to grow going forward.” “Kohn touted Playboy's portfolio of both digital and consumer products, with casino-style gaming, in particular, serving a crucial role under the company's new business model. Playboy also has its sights on the emerging cannabis market, from CBD products to marijuana products geared toward sexual health and pleasure.” "If THC does become legal in the United States, we have developed certain strains to enhance your sex life that we will launch," Kohn said. https://cheddar.com/media/playboy-goes-public-health-gaming-lifestyle-focus Oh? The CEO actually said it? Ok then. “We have developed certain strains…” They’re already working with growers on strains and genetics? Ok. There are several legal cannabis markets for those products right now, international and stateside. I expect Playboy licensed hemp and THC pre-rolls by EOY. Something like this: https://www.etsy.com/listing/842996758/10-playboy-pre-roll-tubes-limited?ga_order=most_relevant&ga_search_type=all&ga_view_type=gallery&ga_search_query=pre+roll+playboy&ref=sr_gallery-1-2&organic_search_click=1 Maintaining cannabis operations can be costly and a regulatory headache. Playboy’s licensing strategy allows them to pick successful, established partners and sidestep traditional barriers to entry. You know what I like about these new markets? They’re expanding. Worldwide. And they are going to be a bigger deal than they already are with or without Playboy. Who thinks weed and gambling are going away? Too many people like that stuff. These are easy markets. And Playboy is early enough to carve out their spot in each. Fuck it, read this too: https://www.forbes.com/sites/jimosman/2020/10/20/playboy-could-be-the-king-of-spacs-here-are-three-picks/?sh=2e13dcaa3e05 Numbers: You want numbers? I got numbers. As per the company’s most recent SEC filing: “For the year ended December 31, 2019, and the nine months ended September 30, 2020, Playboy’s historical consolidated revenue was $78.1 million and $101.3 million, respectively, historical consolidated net income (loss) was $(23.6) million and $(4.8) million, respectively, and Adjusted EBITDA was $13.1 million and $21.8 million, respectively.” “In the nine months ended September 30, 2020, Playboy’s Licensing segment contributed $44.2 million in revenue and $31.1 million in net income.” “In the ninth months ended September 30, 2020, Playboy’s Direct-to-Consumer segment contributed $40.2 million in revenue and net income of $0.1 million.” “In the nine months ended September 30, 2020, Playboy’s Digital Subscriptions and Content segment contributed $15.4 million in revenue and net income of $7.4 million.” They are profitable across all three of their current business segments. “Playboy’s return to the public markets presents a transformed, streamlined and high-growth business. The Company has over $400 million in cash flows contracted through 2029, sexual wellness products available for sale online and in over 10,000 major retail stores in the US, and a growing variety of clothing and branded lifestyle and digital gaming products.” https://www.sec.gov/Archives/edgadata/1803914/000110465921005986/tm2034213-12_defm14a.htm#tSHCF Growth: Playboy has massive growth in China and massive growth potential in India. “In China, where Playboy has spent more than 25 years building its business, our licensees have an enormous footprint of nearly 2,500 brick and mortar stores and 1,000 ecommerce stores selling high quality, Playboy-branded men’s casual wear, shoes/footwear, sleepwear, swimwear, formal suits, leather & non-leather goods, sweaters, active wear, and accessories. We have achieved significant growth in China licensing revenues over the past several years in partnership with strong licensees and high-quality manufacturers, and we are planning for increased growth through updates to our men’s fashion lines and expansion into adjacent categories in men’s skincare and grooming, sexual wellness, and women’s fashion, a category where recent launches have been well received.” The men’s market in China is about the same size as the entire population of the United States and European Union combined. Playboy is a leading brand in this market. They are expanding into the women’s market too. Did you know CBD toothpaste is huge in China? China loves CBD products and has hemp fields that dwarf those in the US. If Playboy expands their CBD line China it will be huge. Did you know the gambling money in Macau absolutely puts Las Vegas to shame? Technically, it's illegal on the mainland, but in reality, there is a lot of gambling going on in China. https://www.forbes.com/sites/javierhasse/2020/10/19/magic-johnson-and-uncle-buds-cbd-brand-enter-china-via-tmall-partnership/?sh=271776ca411e “In India, Playboy today has a presence through select apparel licensees and hospitality establishments. Consumer research suggests significant growth opportunities in the territory with Playboy’s brand and categories of focus.” “Playboy Enterprises has announced the expansion of its global consumer products business into India as part of a partnership with Jay Jay Iconic Brands, a leading fashion and lifestyle Company in India.” “The Indian market today is dominated by consumers under the age of 35, who represent more than 65 percent of the country’s total population and are driving India’s significant online shopping growth. The Playboy brand’s core values of playfulness and exploration resonate strongly with the expressed desires of today’s younger millennial consumers. For us, Playboy was the perfect fit.” “The Playboy international portfolio has been flourishing for more than 25 years in several South Asian markets such as China and Japan. In particular, it has strategically targeted the millennial and gen-Z audiences across categories such as apparel, footwear, home textiles, eyewear and watches.” https://www.licenseglobal.com/industry-news/playboy-expands-global-footprint-india It looks like they gave COVID the heisman in terms of net damage sustained: “Although Playboy has not suffered any material adverse consequences to date from the COVID-19 pandemic, the business has been impacted both negatively and positively. The remote working and stay-at-home orders resulted in the closure of the London Playboy Club and retail stores of Playboy’s licensees, decreasing licensing revenues in the second quarter, as well as causing supply chain disruption and less efficient product development thereby slowing the launch of new products. However, these negative impacts were offset by an increase in Yandy’s direct-to-consumer sales, which have benefited in part from overall increases in online retail sales so far during the pandemic.” Looks like the positives are long term (Yandy acquisition) and the negatives are temporary (stay-at-home orders). https://www.sec.gov/Archives/edgadata/1803914/000110465921006093/tm213766-1_defa14a.htm This speaks to their ability to maintain a financially solvent company throughout the transition phase to the aforementioned areas. They’d say some fancy shit like “expanded business model to encompass four key revenue streams: Sexual Wellness, Style & Apparel, Gaming & Lifestyle, and Beauty & Grooming.” I hear “we’re just biding our time with these trinkets until those dollar dollar bill y’all markets are fully up and running.” But the truth is these existing revenue streams are profitable, scalable, and rapidly expanding Playboy’s e-commerce segment around the world. "Even in the face of COVID this year, we've been able to grow EBITDA over 100 percent and revenue over 68 percent, and I expect that to accelerate going into 2021," he said. “Playboy is accelerating its growth in company-owned and branded consumer products in attractive and expanding markets in which it has a proven history of brand affinity and consumer spend.” Also in the SEC filing, the Time Frame: “As we detailed in the definitive proxy statement, the SPAC stockholder meeting to vote on the transaction has been set for February 9th, and, subject to stockholder approval and satisfaction of the other closing conditions, we expect to complete the merger and begin trading on NASDAQ under ticker PLBY shortly thereafter,” concluded Kohn. The Players: Suhail “The Whale” Rizvi (HMFIC), Ben “The Bridge” Kohn (CEO), “lil” Suying Liu & “Big” Dong Liu (Young-gun China gang). I encourage you to look these folks up. The real OG here is Suhail Rizvi. He’s from India originally and Chairman of the Board for the new PLBY company. He was an early investor in Twitter, Square, Facebook and others. His firm, Rizvi Traverse, currently invests in Instacart, Pinterest, Snapchat, Playboy, and SpaceX. Maybe you’ve heard of them. “Rizvi, who owns a sprawling three-home compound in Greenwich, Connecticut, and a 1.65-acre estate in Palm Beach, Florida, near Bill Gates and Michael Bloomberg, moved to Iowa Falls when he was five. His father was a professor of psychology at Iowa. Along with his older brother Ashraf, a hedge fund manager, Rizvi graduated from Wharton business school.” “Suhail Rizvi: the 47-year-old 'unsocial' social media baron: When Twitter goes public in the coming weeks (2013), one of the biggest winners will be a 47-year-old financier who guards his secrecy so zealously that he employs a person to take down his Wikipedia entry and scrub his photos from the internet. In IPO, Twitter seeks to be 'anti-FB'” “Prince Alwaleed bin Talal of Saudi Arabia looks like a big Twitter winner. So do the moneyed clients of Jamie Dimon. But as you’ve-got-to-be-joking wealth washed over Twitter on Thursday — a company that didn’t exist eight years ago was worth $31.7 billion after its first day on the stock market — the non-boldface name of the moment is Suhail R. Rizvi. Mr. Rizvi, 47, runs a private investment company that is the largest outside investor in Twitter with a 15.6 percent stake worth $3.8 billion at the end of trading on Thursday (November, 2013). Using a web of connections in the tech industry and in finance, as well as a hearty dose of good timing, he brought many prominent names in at the ground floor, including the Saudi prince and some of JPMorgan’s wealthiest clients.” https://www.nytimes.com/2013/11/08/technology/at-twitter-working-behind-the-scenes-toward-a-billion-dollar-payday.html Y’all like that Arab money? How about a dude that can call up Saudi Princes and convince them to spend? Funniest shit about I read about him: “Rizvi was able to buy only $100 million in Facebook shortly before its IPO, thus limiting his returns, according to people with knowledge of the matter.” Poor guy :( He should be fine with the 16 million PLBY shares he's going to have though :) Shuhail also has experience in the entertainment industry. He’s invested in companies like SESAC, ICM, and Summit Entertainment. He’s got Hollywood connections to blast this stuff post-merger. And he’s at least partially responsible for that whole Twilight thing. I’m team Edward btw. I really like what Suhail has done so far. He’s lurked in the shadows while Kohn is consolidating the company, trimming the fat, making Playboy profitable, and aiming the ship at modern growing markets. https://www.reuters.com/article/us-twitter-ipo-rizvi-insight/insight-little-known-hollywood-investor-poised-to-score-with-twitter-ipo-idUSBRE9920VW20131003 Ben “The Bridge” Kohn is an interesting guy. He’s the connection between Rizvi Traverse and Playboy. He’s both CEO of Playboy and was previously Managing Partner at Rizvi Traverse. Ben seems to be the voice of the Playboy-Rizvi partnership, which makes sense with Suhail’s privacy concerns. Kohn said this: “Today is a very big day for all of us at Playboy and for all our partners globally. I stepped into the CEO role at Playboy in 2017 because I saw the biggest opportunity of my career. Playboy is a brand and platform that could not be replicated today. It has massive global reach, with more than $3B of global consumer spend and products sold in over 180 countries. Our mission – to create a culture where all people can pursue pleasure – is rooted in our 67-year history and creates a clear focus for our business and role we play in people’s lives, providing them with the products, services and experiences that create a lifestyle of pleasure. We are taking this step into the public markets because the committed capital will enable us to accelerate our product development and go-to-market strategies and to more rapidly build our direct to consumer capabilities,” said Ben Kohn, CEO of Playboy. “Playboy today is a highly profitable commerce business with a total addressable market projected in the trillions of dollars,” Mr. Kohn continued, “We are actively selling into the Sexual Wellness consumer category, projected to be approximately $400 billion in size by 2024, where our recently launched intimacy products have rolled out to more than 10,000 stores at major US retailers in the United States. Combined with our owned & operated ecommerce Sexual Wellness initiatives, the category will contribute more than 40% of our revenue this year. In our Apparel and Beauty categories, our collaborations with high-end fashion brands including Missguided and PacSun are projected to achieve over $50M in retail sales across the US and UK this year, our leading men’s apparel lines in China expanded to nearly 2500 brick and mortar stores and almost 1000 digital stores, and our new men’s and women’s fragrance line recently launched in Europe. In Gaming, our casino-style digital gaming products with Scientific Games and Microgaming continue to see significant global growth. Our product strategy is informed by years of consumer data as we actively expand from a purely licensing model into owning and operating key high-growth product lines focused on driving profitability and consumer lifetime value. We are thrilled about the future of Playboy. Our foundation has been set to drive further growth and margin, and with the committed capital from this transaction and our more than $180M in NOLs, we will take advantage of the opportunity in front of us, building to our goal of $100M of adjusted EBITDA in 2025.” https://www.businesswire.com/news/home/20201001005404/en/Playboy-to-Become-a-Public-Company Also, according to their Form 4s, “Big” Dong Liu and “lil” Suying Liu just loaded up with shares last week. These guys are brothers and seem like the Chinese market connection. They are only 32 & 35 years old. I don’t even know what that means, but it's provocative. https://www.secform4.com/insider-trading/1832415.htm https://finance.yahoo.com/news/mountain-crest-acquisition-corp-ii-002600994.html Y’all like that China money? “Mr. Liu has been the Chief Financial Officer of Dongguan Zhishang Photoelectric Technology Co., Ltd., a regional designer, manufacturer and distributor of LED lights serving commercial customers throughout Southern China since November 2016, at which time he led a syndicate of investments into the firm. Mr. Liu has since overseen the financials of Dongguan Zhishang as well as provided strategic guidance to its board of directors, advising on operational efficiency and cash flow performance. From March 2010 to October 2016, Mr. Liu was the Head of Finance at Feidiao Electrical Group Co., Ltd., a leading Chinese manufacturer of electrical outlets headquartered in Shanghai and with businesses in the greater China region as well as Europe.” Dr. Suying Liu, Chairman and Chief Executive Officer of Mountain Crest Acquisition Corp., commented, “Playboy is a unique and compelling investment opportunity, with one of the world’s largest and most recognized brands, its proven consumer affinity and spend, and its enormous future growth potential in its four product segments and new and existing geographic regions. I am thrilled to be partnering with Ben and his exceptional team to bring his vision to fruition.” https://www.businesswire.com/news/home/20201001005404/en/Playboy-to-Become-a-Public-Company These guys are good. They have a proven track record of success across multiple industries. Connections and money run deep with all of these guys. I don’t think they’re in the game to lose. I was going to write a couple more paragraphs about why you should have a look at this but really the best thing you can do is read this SEC filing from a couple days ago. It explains the situation in far better detail. Specifically, look to page 137 and read through their strategy. Also, look at their ownership percentages and compensation plans including the stock options and their prices. The financials look great, revenue is up 90% Q3, and it looks like a bright future. https://www.sec.gov/Archives/edgadata/1803914/000110465921005986/tm2034213-12_defm14a.htm#tSHCF I’m hesitant to attach this because his position seems short term, but I’m going to with a warning because he does hit on some good points (two are below his link) and he’s got a sizable position in this thing (500k+ on margin, I think). I don’t know this guy but he did look at the same publicly available info and make roughly the same prediction, albeit without the in depth gambling or cannabis mention. You can also search reddit for ‘MCAC’ and very few relevant results come up and none of them even come close to really looking at this thing. https://docs.google.com/document/d/1gOvAd6lebs452hFlWWbxVjQ3VMsjGBkbJeXRwDwIJfM/edit?usp=sharing “Also, before you people start making claims that Playboy is a “boomer” company, STOP RIGHT THERE. This is not a good argument. Simply put. The only thing that matters is Playboy’s name recognition, not their archaic business model which doesn’t even exist anymore as they have completely repurposed their business.” “Imagine not buying $MCAC at a 400M valuation lol. Streetwear department is worth 1B alone imo.” Considering the ridiculous Chinese growth as a lifestyle brand, he’s not wrong. Current Cultural Significance and Meme Value: A year ago I wouldn’t have included this section but the events from the last several weeks (even going back to tsla) have proven that a company’s ability to meme and/or gain social network popularity can have an effect. Tik-tok, Snapchat, Twitch, Reddit, Youtube, Facebook, Twitter. They all have Playboy stuff on them. Kids in middle and highschool know what Playboy is but will likely never see or touch one of the magazines in person. They’ll have a Playboy hoodie though. Crazy huh? A lot like GME, PLBY would hugely benefit from meme-value stock interest to drive engagement towards their new business model while also building strategic coffers. This interest may not directly and/or significantly move the stock price but can generate significant interest from larger players who will. Bull Case: The year is 2025. Playboy is now the world leader pleasure brand. They began by offering Playboy licensed gaming products, including gambling products, direct to consumers through existing names. By 2022, demand has skyrocketed and Playboy has designed and released their own gambling platforms. In 2025, they are also a leading cannabis brand in the United States and Canada with proprietary strains and products geared towards sexual wellness. Cannabis was legalized in the US in 2023 when President Biden got glaucoma but had success with cannabis treatment. He personally pushes for cannabis legalization as he steps out of office after his first term. Playboy has also grown their brand in China and India to multi-billion per year markets. The stock goes up from 11ish to 100ish and everyone makes big gains buying somewhere along the way. Bear Case: The United States does a complete 180 on marijuana and gambling. President Biden overdoses on marijuana in the Lincoln bedroom when his FDs go tits up and he loses a ton of money in his sports book app after the Fighting Blue Hens narrowly lose the National Championship to Bama. Playboy is unable to expand their cannabis and gambling brands but still does well with their worldwide lifestyle brand. They gain and lose some interest in China and India but the markets are too large to ignore them completely. The stock goes up from 11ish to 13ish and everyone makes 15-20% gains. TL;DR: Successful technology/e-commerce investment firm took over Playboy to turn it into a porn, online gambling/gaming, sports book, cannabis company, worldwide lifestyle brand that promotes sexual wellness, vetern access, women-ownership, minority-ownership, and “pleasure for all”. Does a successful online team reinventing an antiquated physical copy giant sound familiar? No options yet, shares only for now. $11.38 per share at time of writing. My guess? $20 by the end of February. $50 by EOY. This is not financial advice. I am not qualified to give financial advice. I’m just sayin’ I would personally use a Playboy sports book app while smoking a Playboy strain specific joint and it would be cool if they did that. Do your own research. You’d probably want to start here: WARNING - POTENTIALLY NSFW - SEXY MODELS AHEAD - no actual nudity though https://s26.q4cdn.com/895475556/files/doc_presentations/Playboy-Craig-Hallum-Conference-Investor-Presentation-11_17_20-compressed.pdf Or here: https://www.mcacquisition.com/investor-relations/default.aspx Jimmy Chill: “Get into any SPAC at $10 or $11 and you are going to make money.” STL;DR: Buy MCAC. MCAC > PLBY couple weeks. Rocketship. Moon. Position: 5000 shares. I will buy short, medium, and long-dated calls once available.
Gov. Wolf, Sec. of Health Announce New Protective Mitigation Efforts to Put Pennsylvania on Pause through Early January
https://www.governor.pa.gov/newsroom/gov-wolf-sec-of-health-announce-new-protective-mitigation-efforts-to-put-pennsylvania-on-pause-through-early-january/ As COVID-19 cases continue to rise, Governor Tom Wolf and Secretary of Health Dr. Rachel Levine today implored Pennsylvanians to take the next three weeks and stand united against the virus by adhering to existing mitigation orders and stricter efforts announced today. “Today I am announcing additional, temporary COVID-19 protective mitigation measures in the commonwealth,” said Gov. Wolf. “With these measures in place, we hope to accomplish three goals: First, stop the devastating spread of COVID-19 in the commonwealth. Second, keep our hospitals and health care workers from becoming overwhelmed. And third, help Pennsylvanians get through the holiday season – and closer to a widely available vaccine – as safely as possible. This is a bridge to a better future in Pennsylvania.” The new, limited-time mitigation orders take effect at 12:01 a.m. on December 12, and remain in effect until 8 a.m. on January 4, 2021. “Each of the last two days we have reported the highest number of deaths since the beginning of the pandemic,” Dr. Rachel Levine said. “In the past week, we have reported close to 1,100 new deaths from COVID-19 across Pennsylvania. The virus continues to strain our health care systems and the dramatic rise in cases among all age groups, including among school-age children, is alarming. Since the start of the pandemic, there have been more than 37,500 cases among children age 5 to 18, yet 9,500 of those cases occurred in the past two weeks.” The Order provisions outlined here are accompanied by supportive data used in part to make these decisions. The data provides a sampling of research that supports why limiting gatherings, reducing occupancy, and temporarily suspending some activities, among other efforts, are considered vital to stopping the spread of COVID-19. Two recent studies, one by Yale University and one by Stanford University, substantiate more than one of these mitigation efforts. Links to the full studies and additional data and research can be found on the Department of Health’s data page, here. Limited-Time Mitigation efforts announced today include: In-Person Dining and Alcohol Sales
All in-person indoor dining at businesses in the retail food services industry, including, but not limited to, bars, restaurants, breweries, wineries, distilleries, social clubs, and private catered events is prohibited.
Outdoor dining, take-out food service, and take-out alcohol sales are permitted and may continue, subject to any limitations or restrictions imposed by Pennsylvania law, or this or any other Order issued by the Sec. of Health or by the governor.
Multiple studies have found indoor dining to drive case increases and fatalities. A study by JP Morgan analyzed credit card spending of more than 30 million Chase cardholders and Johns Hopkins University’s case tracker and found that higher restaurant spending in a state predicted a rise in new infections there three weeks later. Additionally, research from Stanford University found that restaurants accounted for a significant amount of new infections while research from Yale University found that closing restaurants reduced fatality rates. Indoor Gatherings and Events
Indoor gatherings and events of more than 10 persons are prohibited.
Churches, synagogues, temples, mosques, and other places of congregate worship are specifically excluded from the limitations set forth above during religious services, these institutions are strongly encouraged to find alternative methods for worship, as in person gatherings pose a significant risk to participants at this time. While this an incredibly difficult recommendation to make, particularly at this time of year, faith leaders must carefully weigh the health risks to their congregants given the immense amount of community spread of COVID-19.
A new study from Stanford University and published in the journal, nature, used cellphone data collected from 10 U.S. cities from March to May to demonstrate that restaurants, gyms, cafes, churches and other crowded indoor venues accounted for some 8 in 10 new infections in the early months of the U.S. coronavirus epidemic. Outdoor Gatherings and Events
Outdoor gatherings and events of more than 50 persons are prohibited.
According to a Yale University study, limiting outdoor gatherings was among consistent policies found to reduce fatality rates. The CDC states that medium-sized outdoor gatherings carry a higher risk of COVID-19 spread, even with social distancing. CDC notes that the more people an individual interacts with at a gathering and the longer that interaction lasts, the higher the potential risk of becoming infected with COVID-19 and COVID-19 spreading, and that the higher the level of community transmission in the area that the gathering is being held, the higher the risk of COVID-19 spreading during a gathering. Capacity Limits for Businesses
All in-person businesses serving the public may only operate at up to 50% of the maximum capacity stated on the applicable certificate of occupancy, except as limited by existing orders to a smaller capacity limit.
The same Stanford University study that collected cellphone data also noted that limiting indoor capacity can reduce COVID-19 transmissions. Gyms and Fitness Facilities
Indoor operations at gyms and fitness facilities are prohibited.
Outdoor facilities and outdoor classes can continue, but all participants must wear face coverings in accordance with the Sec. of Health’s Updated Order Requiring Universal Face Coverings, including any subsequent amendments, and practice physical distancing requirements.
According to a Yale University study, closing businesses like gyms was among consistent policies found to reduce fatality rates. Entertainment Industry
All in-person businesses in the entertainment industry serving the public within a building or indoor defined area, including, but not limited to, theaters, concert venues, museums, movie theaters, arcades, casinos, bowling alleys, private clubs, and all other similar entertainment, recreational or social facilities, are prohibited from operation.
The CDC puts movie theaters and other indoor settings on its list of higher-risk activities for contracting COVID-19. In-Person Extracurricular School Activities
Voluntary activities sponsored or approved by a school entity’s governing body or administration are suspended, but these extracurricular activities may be held virtually. This includes, but is not limited to, attendance at or participation in activities such musical ensembles, school plays, student council, clubs, and school dances.
Our top priority is stopping the spread of this virus so students and teachers can return to their classrooms as soon as possible. Data from the Department of Health notes that one-quarter of the cases of COVID among school-age children have occurred within the past two weeks, increasing the need to keep children safe outside of school so that they can return to classrooms. K-12 School Sports and Youth Sports
All sports at K-12 public schools, nonpublic schools, private schools and club, travel, recreational, intermural, and intramural sports are paused.
The Pennsylvania Principals Association is recommending a delay to the start of the winter sports season. The surge in cases among school-age children increases the risk that asymptomatic participants will spread the virus at a game or practice, in the locker room, while traveling to and from events, or at team meals, parties or other gatherings. Professional and Collegiate Sports
Professional or collegiate sports activities may continue in accordance with guidance from the CDC and the Department of Health.
Spectators may not attend such sports activities in person.
The CDC warns large gatherings create a high risk of COVID-19 spreading. “We know that COVID-19 thrives in places where people gather together,” Gov. Wolf said. “Therefore, these mitigation measures target high-risk environments and activities and aim to reduce the spread of this devastating virus.” According to Yale University research, mitigation measures such as mandatory mask requirements, and gym and restaurant closures are policies that most consistently predict lower four- to six-week-ahead fatality growth. “The work we do now to slow the spread of COVID-19 is not only crucial to keeping our fellow Pennsylvanians safe and healthy,” Gov. Wolf said. “It will help all of us get back to normal, and back to all of the things we’ve missed, faster. And it means more Pennsylvanians will be alive to celebrate that brighter future. This year, we show our love for our families and friends by celebrating safely and protecting one another.” Gov. Wolf Limited-Time Mitigation OrderSec. Levine Limited-Time Mitigation Order Frequently Asked Questions Gov. Wolf Amended Mitigation, Enforcement, and Immunity Order edited to add a TL;DR visual: https://preview.redd.it/szqfy8kmxf461.jpg?width=1080&format=pjpg&auto=webp&s=d140dfd06ce3bc91e14528c86eb100ec139bd698
MCAC and Playboy (PLBY) merger. Why I think Playboy has a bigger future.
As I am sure a lot of you know, Mountain Crest Acquisitions (MCAC) are in late-stage talks with playboy to take them public currently at a valuation of ~$425M meaning we should see the MCAC ticket convert to Playboys ticker, PLBY, within a matter of days, if not weeks. A lot of the people I have seen talking about the Playboy acquisition have argued that Playboy is a dying brand and are far beyond their prime, which is no doubt true, in terms of selling sexy magazines that have all but been made redundant by online pornography. However, this company and its newish CEO (of 2017), Ben Kohn, have given it a new lease of life and are changing the globally recognized brand's direction to be more of a lifestyle and sexual wellness brand. They have been seeing huge year on year growth since Kohn's appointment in 2017 across almost all revenue streams, Kohn has been a part of Playboy for many years and initially helped privatize them in the early 2010s. He is highly regarded for his marketing and sales abilities. WHY PLAYBOY? First of all let me offer you CEO Ben Kohn the chance to convince you: Here is his investor presentation.The numbers are extremely impressive. If you would rather hear it from me, for whatever reason, my take is below: For me, one of the most notable things about this deal is its the extremely rare opportunity to buy into one of theworld's most known brands at such a low valuation. How many SPACs currently on the market would you be able to ask your typical man or woman on the street about the company they plan on buying and almost everytime get an answer about who they are and what they do? Playboy had a WHOPPING $3bn annual spend on thier brand across 180 countries worldwide last year! Playboy are taking huge strides moving away from the sex negative and very 20th century ideals they built their original empire off, and closing in on an increasingly empowered and sexually liberated young demographic. The sexual wellness market is seeing massive growth among people both young and old and is expected to reach $125 billion by 2026 with an expected anual growth of 12.1% YoY, now think about the size of this market in context of how many brands do you know that are key players in this sector? It should be somewhat obvious that Playboy is in an extremely unique position to capitalize on its massive recognition in a growing market otherwise lacking recognized leaders, they plan on doing this with a strategy of M&A which are outlined below. First, I will talk about what they are doing now to fit themselves into the market we see today. Playboy has begun a plan to increase growth via acquisitions, and started by buying leading sexual wellness reatilerYandy at the end of 2019, and have driven direct sales up from $3.7M in 1H 2019 to $29.7M in 1H 2020. On top of this, they are working to make their own playboy.com website into a retail destination, and across Yandy and their own store they were seeing 70,000 orders a month with a AOV of $72. During the stock redemption period Stockholders requested redemption of a total of 8,842 shares, less than 0.2% of Mountain Crest’s issued shares. As a result, Mountain Crest anticipates that approximately $58.7 million will be released to PLBY Group immediately following the closing of the transactions, with further PIPE investments of $50 million. Ben Kohn, CEO of Playboy, said, “We are delighted with the overwhelming support for this transaction, which at closing is expected to inject more than $100 million of gross proceeds into PLBY Group, so that we can aggressively capitalize on our well-defined and exciting organic and acquisition-led growth plan.”. On top of direct sales increases, Playboy continued to capitalize on their brand recognition by increasing licensing revenues YoY,with ~$400M currently in forward-booked cash flow. Note licensing is one of the most cost-effective way brands can earn revenue, with 80% cost margins and being able to create such licensing demand is a rare feature only attributed to truly globally recognized brands. I read somewhere which I now cannot find that Kohn has said (I am sure somewhat jokingly) that he believes the Playboy Bunny Logo alone is worth a billion dollars, and I can see some truth in it, the Playboy bunny is close to the levels of recognition of the Nike swoosh or the McDonalds M, even among young people who have probably never seen a playboy mag before, myself included (i have never seen it sold in the UK). As breifly mentioned above, playboy Revenues are growing rapidly. 2020 Projected Revenues is expected to be up 75% year over year, and Projected Adjusted EBITDA is expected to be up 112% year over year, they have projected 2021E revenue and adjusted EBITDA of $166.8M and $40.3M, respectively, with an goal of $100M EBITDA by 2026. They already have a number of CBD-based products and have plans in place to grow into the legal marijuana industry when it is eventually legalized at the federal level. They are looking to increase their positions in the gaming industry and have recently opened a poker house in Houston, on top of their London Casino, with further plans to add more casinos in the US, and looking for sports betting partnership opportunities. Playboy are already an established producer of apparel and maintain a realtively large presence within the market, particularly in China, where their items are sold in over 2,500 brick and mortar stores, and 1,000 online stores across the nation. In the western World they are stocked at household retailers such as urban outfitters, and have done many collabs with well regarded and in fashion millenial brands such as Supreme, Anti Social Social Club, and Alpha industries (all 3 of which have seen extraordinary growth among young people all within very short time). For me this stands out massively and shows promise on both sides of the table; These trendy and modern brands want to associate with the Playboy logo and lifestyle, showing a level of interest from consumers, but more importantly it shows that Playboy is tapped in and aware of the youth culture, an area in which they have the potential to capitalise massively on through all of their revenue streams. One of the things i think people are most underestimating about this merger is that the current trajectory Kohn is taking Playboy along is very 2021, and is extremely focused on growth. I believe the brand to be undervalued already, and when taking into consideration the trends in Millenial and Gen Z society, I think this brand is ready to once again become a market leader in its new sectors. A comment I saw on another DD put it well: "If Kylie Jenner thinks its cool, it probably is". It sounds stupid, but the power of social media in conjunction with its recognized logo and brand mean you cannot underestimate this companies value and potential for both short term and long term growth. Coupled with the large cash injection of over $100M and a new focus on M&A, the upside really is potentially enormous. Personally i think it is somewhat criminal this company does not have a current valuation of close to a billion USD considering its recognition, and i think Kohn is the man to enable playboy to capitalise on their extremely unique position in a rapidly growing market. The above stats are all taken from the Playboy investor presentation given by Ben Kohn here,(as said above I would encourage you all to look at this, it is very impressive), and from MCAC press releases that can be found here.
A couple of weeks ago I posted a DD on Prospect Resources (PSC). It was met with some skepticism on the stability of running a mine in Zimbabwe. I wanted to share what I have learnt about the state of the project and the foreign risk. The economics of the project are undeniably attractive with PSC being the most undervalued lithium exploreproducer, but the price has yet to take off so I wanted to discuss why the market's reluctance to re-rate PSC might be based on assumptions rather than actual research. So before I get started, a few things:
I am not trying to convince you to buy, I want you to do your own DD and decide for yourself.
This is a casino, you think that a 5x bagger comes without risk. Don't be so fucking stupid. But as you will see below, the risk is mostly mitigated due to the good work of the PSC directors.
Economic Recovery Zimbabwe is focused on economic recovery with mining and agriculture their main exports. Under agriculture Z-gov is seeking to make amends and compensate the farmers that were forcibly removed from their lands. Under mining, Prospect was selected in the mining portfolio to be part of the Rapid Result Initiative (RRI). Thus PSC is one of the companies that will be used as a case in point to highlight Z-gov openness and support of foreign investment. National Project Status (NPS) https://www.prospectresources.com.au/sites/default/files/asx-announcements/6857667.pdf The Z-gov has awarded the Arcadia project NPS. Projects awarded national project status get preferential treatment, which includes exemption from paying import duty and other taxes. This affords opportunity and stability as well as the below benefits. - Exemption from VAT (0%) on imported equipment, materials and parts required for the construction of the plant or incorporation into the plant. - Rebate of customs duties on imported equipment, materials and parts required for the construction of the plant or incorporation into the plant. - Duration up to 5 years, completing on project commissioning Special Economic Zone (SEZ) The Special Economic Zone license is currently the most significant and advanced measure that provides mitigation to PSC's investment into Zimbabwe. Under the SEZ: - Prospect can operate a foreign currency account with any banking institution within the Special Economic Zone or outside Zimbabwe. - Corporate income tax Corporate income tax at 0% for the first 5 years, and 15% thereafter. 25% Non-residents withholding taxes - Tax exemption (0%) from non-residents tax on:
Dividends – Payments to shareholders;
Remittances – Payments made between Prospect Lithium Zimbabwe and Prospect Resources (intercompany payments);
Royalties – Payments for o shore software and other subscription services; and
Fees for imported services.
- Exempt from the requirement to obtain permits for the import and export of goods from and to countries outside Zimbabwe. - 100% rebate or duty-free importation on goods to be used or consumed within the SEZ. - Employment of expats Streamlined visa process for expatriate labour. This provides financial safety, separation and independence from any possible financial instability in Zimbabwe. Foreign Interest in PSC PSC is backed by the Chinese (Sinomine) who have taken a $10m equity stake and are offering an additional $10m on initiation of plant construction in the form of prepayment of their offtake agreement. Uranium One have also taken a keen interest and are in discussions with PSC for an equity stake to secure an offtake. Uranium One (founded in Canada) is now owned by Rosatom (Russian state). The current chairman of PSC is the founding director of Uranium One. Uranium One are targeting between 9% and 10% of the global Lithium market by 2030. So you have both the Russian and Chinese government involvement in PSC (two of Zimbabwe's closest allies). Possibly why the Arcadia Lithium project was so quick to receive NPS and SEZ. Administrative Red Tape You probably think Zimbabwe is inefficient and slow? Possibly, but that doesn't matter, PSC have all the required mining and environmental permits and approvals in place. Under the SEZ they don't need export approvals either. Prospect was fully permitted in record time (see above as to why). Stable Power and Water Supply https://www.prospectresources.com.au/sites/default/files/asx-announcements/6959823.pdf Under the SEZ PSC have a secure electrical power supply agreement, PSC retain and service charges in USD allowing PSC security and ranking as customer. There is a quality assurance guarantee in line with electricity regulations. The power is supplied from the existing Lake Kariba hydroelectric power station. The lithium project is located within 3km from the 33kVA national power grid and has groundwater and surface water facilities. Transport and Logistics PSC have the best infrastructure position of the region's lithium miners: Arcadia mine is only 580km from the Beira port with access to bulk loading facilities with dual carriageway running 20km from site. Compare this to 800+km for Goulamina, 1500km for AVZ. The Beira port has serviced Zimbabwe's importations needs for 60 years. A truck journey is approx. 18hrs, this is viewed as best in class. Arcadia is also only 38km from the capital Harare providing easy access to skilled and unskilled labour and resources. Political Stability Yes, they have had their problems. However, the Minister of Mines is the former CEO of Minosa so is not a career politician but an accomplished miner. The next Zimbabwe election is in 2023, PSC will have full production plant pumping by then. A fellow miner, Bikita Minerals, have been operating their Glencova (Zimbabwe) Petalite mine producing 50,000tpa of Petalite (the only pure Petalite mine in the world) without any issues. They have been operating through Mugabe instability, Covid-19, etc. AVZ is a similar lithium miner located in DRC (Congo) in arguably a more politically unstable country. Yet for some reason the ASX market has no issue re-rating AVZ. Obviously there are some differences but PSC is still grossly undervalued by whatever measure you use. https://www.mining-technology.com/projects/arcadia-lithium-project-harare/ I will post more info next week on the economics of the project that make it so undervalued.
Ghost in the Shell is a terrifying vision of Western-Globalized Japan
People have criticized the Ghost in the Shell adaptation by Hollywood as a whitewashed movie. However, i see there is a sinister message behind the move that seems good for Westerners and bad for Japanese. The movie isn’t an entertaining one but it is a prophetic vision. Most Hollywood movies have social and political commentaries that send messages for wisest observers. As a long time observer of Japan, I realized the message. The movie doesn’t simply speak against the wrongness of transhumanism unchecked but it also revels the gospel of globalist capitalism. In the movie, you see the Neo-Japan as an exciting place for international players of all kinds. It’s a world financial hub. In today, Japanese neoliberals are trying hard to turn Japan into London. https://asia.nikkei.com/Editor-s-Picks/Interview/Suga-Tokyo-can-be-global-financial-hub This seems all good but people of UK weren’t happy when the Iron Lady demolished British economy for American corporations. The UK is increasingly getting poorer and on verge of collapse after Brexit. https://www.bloomberg.com/news/articles/2020-12-05/the-cost-of-failure-what-s-at-stake-if-brexit-talks-collapse London became the world capital for crooks and global elites, while British people don’t see any benefit. This is what Japanese cronies want to bring into Japan. https://english.kyodonews.net/news/2020/12/d8928a66c1ed-casino-winnings-by-nonresident-foreigners-to-be-untaxed-in-japan.html They already think of destroying the Japanese economy through allowing massive tax breaks for foreigners. Exactly like what Tories in the UK did. In the movie, you see all people of non-Japanese backgrounds. There are very little Japanese people in the movie. What happened? Population displacement, as Tokyo is too expensive for Japanese people to afford, while rich foreigners can. This movie is parallel to the real world cases where massive foreign capitals ruin local lives. Djibouti is a cautionary tale of massive foreign capitals creating more inequalities and ruining local businesses. http://hdr.undp.org/sites/all/themes/hdr_theme/country-notes/DJI.pdf The case of Japan is no different today. Japan suffered three great economic recessions and got deteriorating conditions each time. Japan, similar to Thailand, has wage stagnation due to a deflationary economy. This means that everyone can no longer become rich in the long run if they work within Japan since their wages keep falling. It’s good that an appreciated currency can increase your buying power (if you have a lot of money already); however, it killed growth. Like Thailand, Japan has no choice to seek a service economy that caters for tourists as a way to accumulate more USD. https://www.nippon.com/en/japan-data/h00646/amp/ This was the original plan for the Olympics 2020 which failed miserably. As Japan gears towards service economy, real estates become sky high as foreigners purchase them. https://japan-forward.com/chinas-wealthy-out-to-buy-japanese-ryokans-that-suffered-losses-during-pandemic/ https://www.scmp.com/lifestyle/travel-leisure/article/3011062/private-equity-funds-pour-money-hot-spring-resorts-japan As a result, Tokyo to Osaka see many expensive real estate assets that are mostly owned by foreigners. Japanese locals can’t afford the rents, and they now migrate to the countryside. https://www.weforum.org/agenda/2020/11/japan-tokyo-cities-city-countryside-pandemic-coronavirus-covid-19/ All of these have been symptoms that we saw in London and San Francisco. Japanese elites keep spinning reasons but we know the answers. The movie portrays a future where Japanese people are either kicked out of Tokyo or stucked in caged apartments to make rooms for foreigners. The biggest theme of the movie is the rampant corporatism - a big critical theme in the movie. However, the movie merely points it at the foreign corporations who are villains in the first place. All corporations in the movie are foreign and operated by the West. There is little to no Japanese. Today, it’s the trend in the Japanese corporate world as more companies get acquired by foreigners. These foreigners do not give a damn about Japanese people. https://www.ft.com/content/bdf8abd2-f84c-11e3-a333-00144feabdc0 It’s all about the mighty dollars for the Globalists, not the nation. https://www.nytimes.com/2019/08/25/business/nissan-ghosn-lawsuits.html Now, it’s much worse for Japan as the foreigners figured ways to skiffle Japanese sovereignty for profits. These foreigners can control Japan without even calling the US government. https://www.bloomberg.com/opinion/articles/2020-12-11/masa-son-s-softbank-takes-to-discipline-from-paul-singer-s-elliott-management https://asia.nikkei.com/Business/Business-Spotlight/Warren-Buffett-s-Japan-trade-The-changing-world-of-sogo-shosha https://www.ft.com/content/6e18f816-de9b-44d0-9541-1daf758a6c01 Now, it’s even much worse as their successes becoming more prevalent when Japanese power leverages wither with the rampaging pandemic. https://www.ft.com/content/fc4ea0f4-d54e-4b59-ae4b-da2e32fce286 The movie sees many non-Japanese people around as well as Japanese cultures and thought don’t exist in the movie. Why? Globalism diluted cultures into a melting pot. Japan in the movie has become American. In real world, we already see this through massive efforts from Western NGOs and liberals trying to penetrate and disrupt Japanese archaic cultures. Not for Japanese people, it’s better for smoothing the process of Globalism where any foreigner in Japan won’t be attacked by Japanese for being rich and different - like the Bakumatsu period where foreigners were attacked by local Japanese. https://asia.nikkei.com/Business/Business-trends/Nike-shrugs-off-Japan-boycott-threats-after-controversial-ad Nike simply shrugs off the critics from Japan because their globalist agenda has been succeeding after 1990s. Japan has lost all power leverages and become an open book for Westerners to freely manipulate Japanese consciousness. ————- The movie is a prophecy of what Japan will be. An American territory for dark money and unfettered corporatism. All of these are now happening in Japan, and no one cares. It stunned me to see how close the movie is to the current deteriorating situation of Japan and the rise of Western influences over Japan in negative ways.
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