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Has Playboy Reached Retirement Age?

Latest financials for media and lifestyle company suggest selloff may be bottoming out.
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Playboy magazine turns 69 this year, but the brand can still draw attention from consumers and investors. 

As an investment, Playboy Group  (PLBY) - Get Free Report has struggled. In recent months alone the stock has lost nearly two-thirds of its value, tumbling from over $40 per share to under $15. Nevertheless, former Real Money Columnist Timothy Collins was intrigued by the company's latest results. 

“For the year, revenue grew 67%, buoyed by a 131% increase in DTC (direct-to-consumer) revenue. Given the higher margins related to DTC revenue, that's a huge win for PLBY," Collins wrote.  "While they lost money, it was driven by acquisitions and the usual stock-based compensation. Once EBITDA results are adjusted for large stock-based compensation expenses, that number moves into the black.”

In addition, "triple-digit revenue growth year-over-year spurred the fourth quarter to a result well above consensus. PLBY reported revenue of $95.7M versus estimates of $84.35 million."

Still, the aging media company occupies an awkward space both professionally and culturally.

At one time the brand and magazine occupied a central place in American culture. But for many people, the magazine at the heart of the brand symbolizes the kind of fetishizing excess that belongs in the past. On the other hand, that same magazine has boasted writers such as Ray Bradbury, Jack Kerouac and Margaret Atwood and reporters with White House press credentials.

The company went public in the early 70’s, then private in 2011, then returned to the stock market in February 2021.

For Collins, Playboy is a test case for how to study a declining stock.

Tumbling prices can open up an opportunity for investors. Certainly it’s much cheaper to invest in PLBY now than a few months ago. At the same time, though, buying a declining stock means making a bet that the rest of the market has gotten something wrong. To make that call, you need to look at the stock’s fundamentals and its technical indicators. What is it about this business model that you believe in? And what is it about the price action that tells you this might go well? What are you seeing that everyone else has missed?

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