Who Am I?....Episode 4 / PLBY Group (PLBY)

I’m a de-spac microcap with a chequered history and a prolonged period of poor share price performance (-98% from 2021 highs).

I’ve been ignored for years.

There’s been no online write ups for 2 years. Never discussed on Microcap Club. Nothing detailed on X (Twitter). There are 2 blog write ups in 2023: one neutral, one positive - both are outdated. Investor letters: only Greenlight has mentioned me, I was described as an “unsuccessful investment” in Q3 2022. Value Investor Club: I was pitched once in 2021, as a short. Just one sell side analyst covers me and initiated a couple of months ago. I’m also a sin stock so anyone with an ESG mandate can’t own me.

Yet I’m one of the most recognisable and iconic consumer brands in the world, with over 70 years of heritage and a lot has changed in the last 6 months. I was distressed until a recent debt restructuring and a transformational licensing deal with a strategic partner drastically improved my financial footing.

The strategic partner is an unlisted, online behemoth, with over 70m DAUs. The licensing deal means I’ll earn at least 3x my market cap in 100% margin licensing fees over the life of the contract, with further upside if the 25% net profit exceeds the $20m per year minimum guarantee. The strategic partner has a taken a board seat. This insider, who has the deepest insights into my largest profit stream, is buying 30% of the company at a 50% premium! I suspect they see the strategic value in my brand and/or expect to end up paying me materially more than the minimum guarantee, via the 25% profit share.

I’m now free cash flow positive, and focused on growing my core business, which is very high quality. I’m going back to my roots. I only have one remaining non-core asset to sell and the proceeds from that should wipe out most of my debt. My remaining core business is solely focused on licensing my iconic brand. There will no M&A and after retiring debt, free cashflow will go exclusively to shareholder returns. $20m of overhead (plus $3m SBC) is all that is needed to support this. Minimum guarantees provide downside protection, accounting for 85% of today’s licensing revenues.

I’m confident that I can re-invigorate growth, now that I have the bandwidth and financial resources to do so. My China business has been weighed down by both problematic licensing partners and macro headwinds. New Chinese licensing partners have now been in place for 12 months and are ramping up. Until very recently I had neglected 2 key licensing verticles: gaming & hospitality, which were big revenue contributors pre-covid. My management team are also excited by the monetisation potential in new untapped verticles.

Licensing revenues with c.90% gross margins combined with minimal capex, interest expense, cash taxes (thanks for multiples of my market cap in NOLs) and no working capital needs means that 80% of incremental revenue should drop through to free cash flow.

Scenario analysis, assuming I’m a debt-free pure licensing business:

A) No growth:
=> c.7x FCF, with c.40% FCF margins.

B) Hospitality & gaming recover to pre-covid levels:
=> 4-5x FCF, with c.50% FCF margins.

C) China, hospitality & gaming recover to 50% of pre-covid levels:
=> c.4x FCF, with c.55% FCF margins.

D) China recovers to pre-covid levels:
=> c.3x FCF, with c.60% FCF margins.

E) China, hospitality & gaming recover to pre-covid levels:
=> c.2x FCF, with c.65% FCF margins

I’ll let you decide which scenario you think is most credible and what the right multiple is for growing pure play licensing business, with 90% gross margin, 40-65% FCF margins, with downside protected by minimum guarantees.

But, if you thought 15x FCF was a fair multiple, the scenarios ABCDE above would translate to 100%, 200%, 300%, 400% and 600% upside respectively.


Who Am I?……I’m Plby Group Inc aka Playboy.
Ticker: PLBY, Date: 28 April 2025, Share Price $0.97.

Disclaimer: The author owns securities in PLBY….DYODD, nothing written is investment advice.

Uzo