PLBY | Strategy Change 5.0

Shocker – PLBY out with another miss and weak revenue. I’ll wear this tattooed black eye on being wrong on this stock in perpetuity – my worst call ever. But the question is what it always is – what do you do from here? I still think this stock is worth meaningfully higher in 12 months than it is today. Is it on my Best Idea Long list? No. But I just can’t justify selling this stock when it’s trading at 30% of liquidation value. It doesn’t belong up there with RH, NKE, CPRI, etc… The point on liquidation value is the good news, because the latest strategy change (I think the fifth one since it went public) is to sell virtually all of its assets – down to the art collection -- and become a 100% capital light licensing model. It’s selling Lovers and Honey Birdette, the proceeds of which should fully cover PLBY’s debt burden. So basically this is turning into a company that has no physical assets, minimal capex requirements, another bucket of cost cuts at corporate, and virtually no working capital. On top of that it has $346mm in guaranteed royalty payments through 2031 – which doesn’t account for the overages its likely to get from its new deal with Li&Fung. I’d peg the real number closer to $500mm. It also doesn’t account for the consumer products business royalties, as that business will now be fully outsourced. Dare I add that it includes ZERO from the creator platform (formerly CENTERFOLD) which has been growing at a weekly 10%+ CAGR this whole year. I’m not hanging my hat on the success of that platform – in fact I hope it fails because it will cost the CEO his job (which would likely make the stock double in a single tick). But at a paltry $125mm market cap (again, assuming debt free post asset sales where EV = cap), the value dislocation here is simply tremendous. The numbers just don’t add up. This company is NOT going belly up, though the market is pricing it otherwise.