PLBY announced it is acquiring the startup creator content platform Dream (dream.me) for up to $30mm in stock. The deal accelerates the launch of PLBY's new Centerfold creator content platform. The asset purchase and subsequent launch of CENTERFOLD are planned for 4Q (this quarter). This acquisition makes a lot of sense to us. The window to step in and seize OnlyFans share is limited. We imagine an organic hiring process for such a tech product is challenging in the current employment environment and PLBY is wise to get the platform up and running as soon as possible. Per our note below on CENTERFOLD, the platform can significantly accelerate brand monetization and value creation. Between prior acquisitions, new business lines, and this content platform launch, the catalyst calendar is looking very positive for PLBY.
Our Note From 9/22/21
PLBY | New Creator Platform = Big Monetization Catalyst
With OnlyFans recent missteps, PLBY is launching a creator platform to drive rapid monetization of brand relevance in Sexual Wellness.
This new PLBY creator platform is huge. Yesterday on Twitter PLBY announced its new creator led platform “dedicated to creative freedom, artistic expression and sex positivity”. The platform is being named CENTERFOLD, alluding to the feature of the old magazine issues. This is trying to capture market share being forgone by OnlyFans which is struggling to get capital in the private markets and battling with a ‘not safe for work’ image. We heard of job postings for the PLBY initiative about a month back. PLBY is moving fast to capture a business opportunity that is a natural extension of the brand.
Lets put the value opportunity into context…
- Per Axios, referencing an OnlyFans pitch deck from March, the company did $2.2bn in GMV in 2020, trending to $5.9bn in 2021, that translates to $375mm in revenue in 2020 or $1.2bn in estimated revenue in 2021. Free Cash Flow of $620mm in free cash flow up from $150mm in 2020. The growth trajectory appears massive and the interest level high given google interest. If the numbers are right, what should we say is the value of OnlyFans $10bn to $30bn? It would seem very easy for CENTERFOLD to get some share here given it already has some relevant interested creators; combined with the brand recognition perhaps Playboy’s opportunity is even greater than OnlyFans.
Source: Google Trends - The other perhaps less appreciated opportunity here is what this platform does for the Sexual Wellness offering. If we assume CENTERFOLD is successful, the company can simply send its entire sexual wellness product portfolio to top relevant creators. It provides free (give them a referral fee if desired) direct marketing of product to engaged target consumers. Think “Get this Honey Birdette outfit, or Pleasure For All gummy, or Lovers toy, or Playboy Makeup in the link below”. Monetization has been the problem with the PLBY P&L vs the brand relevance. This initiative could be a rapid remedy to that problem.
The stock took a hit on the recent China macro news, and it continues to get little interest from the institutional crowd given the ESG concerns. However that is simply providing a huge opportunity for anyone that can own this stock to buy what we think is a massive future cashflow stream at an incredibly low valuation today. The more we contemplate the CENTERFOLD opportunity, the more we wonder if our $10bn EV target is too low.
