The market is speaking loud and clear about this PLBY print…and that’s that it will disappoint. We, however, think that the conference call will show that our multi-year, multi-bagger, call on this stock is completely on track. Though PLBY is up 66% since we made our call at $25.50 – the stock has had an absolutely abysmal May-to-date, down 29% in a flat market. We’ve also seen the short interest double to 20%. We’re at $0.04 per share for the quarter vs the consensus at break-even. The difference there, we think, is inconsequential. The challenge is that this is the smallest quarter of the year for PLBY, and there are no quarterly numbers reported for 1Q20 to base yy growth and margin targets off of given the timing of the de-SPAC’ing process – which makes modeling an otherwise trivial quarter a complete melee. The real risk with a quarter like this is that with earnings coming in close to zero, and the company not providing annual EPS guidance (and certainly not openly blessing our $5-$6 EPS number over five years vs the Street at $1.40), the stock’s valuation support is virtually zero. There are plenty of haters on this name – which we welcome with open arms – they’ll be painfully covering much much higher. Needless to say, if there is noise in the numbers, we’d be buying aggressively on weakness. We’d be buying aggressively anyway with the stock at the low end of its risk range.
We presented our TAIL call on PLBY Yesterday, and how we get to a $250 stock over a TAIL duration. Slide deck and replay link CLICK HERE. Arguably the most important slide is the one below, where we add up the different initiatives on PLBY’s plate as it transforms the company, and assigned and equity value on end-market demand to each initiative under a bear, base and bull case outcome. The punchline is that at the midpoint, we get to approximately $14.7bn in market cap, which is about 800% upside from today’s $1.55bn. Even at the low-end -- i.e. the company grossly underperforming our expectations -- you're looking at well over 200% upside.
If you’re freaking out over a couple pennies in an ‘impossible to model’ quarter here, we think you’re seriously missing the big picture as to the many ways to win with the transformation of this business, and would argue that this is not the stock for you anyway. But for us, we’re buyers on this weakness in a simply massive way. If you are in the 'I missed it' camp, here's your chance for redemption.
