Hardware:
I think the smartest defensive move Facebook can make at this stage is doing whatever it takes to become a major player in consumer hardware. Even if they breakeven, or lose money on this endeavor it can be treated as user acquisition costs for the people who wouldn't make a Facebook account otherwise, or as a way to make Facebook accounts as sticky as possible to protect against people leaving the platform. Anecdotally, I've seen people that have preached "Facebook is evil" for years, say that not they will not ever delete their newly open accounts because if they did their Oculus hardware wouldn't work, and they'd lose all of their purchases.
Facebook is dominating the growing VR market with an iron fist. Non-advertising revenue grew 156% in Q4, and IDC estimates 3 million Quest 2's were sold in Q4. Oculus Quest 2 has stellar reviews, despite the mandatory Facebook account for use. Facebook's VR devices also use Messenger for messages, Workplace for enterprise, and I believe Facebook Horizon (which is integrated with the FB app) will eventually be the place users load into initially, and launch third party apps from.
High investment cost makes it unlikely that other social media company can compete with Facebook in hardware (especially AVR), and this should give Facebook a permanent utility advantage against its peers. The companies that could compete, big tech, and gaming giants seem unwilling to make the investment to compete. I think they're aware that Facebook is completely fine making $0 to be dominant in the VR space, and that's scared them away in addition to facts like VR being a relatively small market for them.Apple is rumored to be considering a release of a Quest-like headset in later 2022, but the device will be priced far above $1000 according to Mark Gurman.
VR is where I'm most confident in Facebook's ability to achieve its hardware dreams, but consumer AR is also an area where its only competition in terms of investments made is Apple. So I think their chances there are decent too. Facebook is working on long term AR glasses, but is also releasing Smartglasses in collaboration with Luxottica (Ray-Ban and Oakley) this year. There's also Facebook's line of smart video chatting devices, Portal.
Traditionally Listed Moats
Intangible assets consisting of the vast amount of data users have shared: sustained and growing, but people are also sharing things about themselves on other apps increasingly.
Growth of users means network effects still growing
Number and diversity of advertisers, and advertiser verticals still growing
Competition?
There is rising social media competition, and always the threat of new entrants. That being said, competition seems to carve out niches, so they aren't competing as directly as we'd think. The closest thing to Facebook the Blue app, for connecting with family and friends is Instagram. Competing apps can have similar features, but the main utilities are different. Tik Tok is mostly a short video app, Youtube is a long video app, Twitter is a breaking news app, Reddit is a communities app, etc. Facebook's utility first and foremost is connecting with REAL people who's identity you can verify, like friends and family. Like previously mentioned, the closest competitor is Instagram.
Messaging
There can be lack of differentiation here, but Messenger tied to Facebook, Instagram, Portal and Oculus. I suspect it'll be tied to future hardware as well. Whatsapp has network effects, and may one day have lock-in comparable to Chinese super apps (at least that's what's being worked towards). iMessage is the the main competitor here, because they are automatically installed on every iPhone
Misc
I think Facebook Marketplace, the Craigslist alternative benefits greatly from Facebook using real identities, and is an overall better product. If you want to sell something locally FB Marketplace is the best option, and I think it's a strong reason to have an account. Usage of Marketplace is growing.
The integration with Jio in India, and importance in Indian society is worth mentioning for Whatsapp.
Facebook Groups, have competition in the form of Reddit, and Discord. The edge here will be real identities, and the tools they are building to make moderating a Facebook group profitable (subscriptions, etc)
The only other pure "Real Identity social network" is Linkedin is a professional network.
Problems
No young people use Facebook? This seems to be a US centric cliche, as Facebook is popular among all age demographics around the world. According to Pew Research 76% of people 18-24 use Facebook, only superseded by Youtube. For teens in 2018, 51% of teens used Facebook which is good in my opinion for a social network not targeted to teens like Tik Tok. I personally think the utility of Facebook kicks in after college age, but regardless if there is a problem, I think the cure can be User Acquisition through hardware.
Chance of mass exodus? again, mitigated by the lock-in of hardware, but this is a concern of mine based on Facebook's reputation. 1. Privacy, there is truth to some criticism here, because Facebook's business model does depend on data collection, and in many ways is opposed to strict definitions of privacy, but much of it is also pushed by myth like "Facebook sells data". Facebook has the same business model as its advertising funded peers, but perception is what matters, and Facebook is losing the perception battle. 2. Politics, In my opinion has been half of Facebook's reputation problem. Recently Zuck said that they are trying to make Facebook less political by not recommending political groups, and lowering reach on political posts. Also, Donald Trump being gone should make the next 4 years less politically controversial. Since Facebook is in the business of advertising, and people can mostly say what they want, there's always the small chance of a #DeleteFacebook movement reaching critical mass based on these themes.
Being banned in countries? Mitigated by becoming a hardware player, but this is an unlikely outcome for many reasons that my hands are too tired to elaborate on.
Apple's privacy stance and iOS 14: The hit to revenue estimates I've seen are between 1%-7%, but it could also be a boost to revenue since third party signals being reduced will give the edge to whoever has the best first party signals, we'll have wait to see. This is something to watch closely, but transferring third party data into first party data by having ecommerce on the platform through initiatives like Facebooks shops, and Instagram shopping can be the cure. Also, being in control of hardware mitigates this risk
Antitrust- generally not concerned
Privacy as a theme that is adversarial to advertising - slightly concerned but I don't think ad funded business models are going anywhere, many people like not paying for things
Might add more to this later...

Hardware:
I think the smartest defensive move Facebook can make at this stage is doing whatever it takes to become a major player in consumer hardware. Even if they breakeven, or lose money on this endeavor it can be treated as user acquisition costs for the people who wouldn't make a Facebook account otherwise, or as a way to make Facebook accounts as sticky as possible to protect against people leaving the platform. Anecdotally, I've seen people that have preached "Facebook is evil" for years, say that not they will not ever delete their newly open accounts because if they did their Oculus hardware wouldn't work, and they'd lose all of their purchases.
Facebook is dominating the growing VR market with an iron fist. Non-advertising revenue grew 156% in Q4, and IDC estimates 3 million Quest 2's were sold in Q4. Oculus Quest 2 has stellar reviews, despite the mandatory Facebook account for use. Facebook's VR devices also use Messenger for messages, Workplace for enterprise, and I believe Facebook Horizon (which is integrated with the FB app) will eventually be the place users load into initially, and launch third party apps from.
High investment cost makes it unlikely that other social media company can compete with Facebook in hardware (especially AVR), and this should give Facebook a permanent utility advantage against its peers. The companies that could compete, big tech, and gaming giants seem unwilling to make the investment to compete. I think they're aware that Facebook is completely fine making $0 to be dominant in the VR space, and that's scared them away in addition to facts like VR being a relatively small market for them.Apple is rumored to be considering a release of a Quest-like headset in later 2022, but the device will be priced far above $1000 according to Mark Gurman.
VR is where I'm most confident in Facebook's ability to achieve its hardware dreams, but consumer AR is also an area where its only competition in terms of investments made is Apple. So I think their chances there are decent too. Facebook is working on long term AR glasses, but is also releasing Smartglasses in collaboration with Luxottica (Ray-Ban and Oakley) this year. There's also Facebook's line of smart video chatting devices, Portal.
Traditionally Listed Moats
Intangible assets consisting of the vast amount of data users have shared: sustained and growing, but people are also sharing things about themselves on other apps increasingly.
Growth of users means network effects still growing
Number and diversity of advertisers, and advertiser verticals still growing
Competition?
There is rising social media competition, and always the threat of new entrants. That being said, competition seems to carve out niches, so they aren't competing as directly as we'd think. The closest thing to Facebook the Blue app, for connecting with family and friends is Instagram. Competing apps can have similar features, but the main utilities are different. Tik Tok is mostly a short video app, Youtube is a long video app, Twitter is a breaking news app, Reddit is a communities app, etc. Facebook's utility first and foremost is connecting with REAL people who's identity you can verify, like friends and family. Like previously mentioned, the closest competitor is Instagram.
Messaging
There can be lack of differentiation here, but Messenger tied to Facebook, Instagram, Portal and Oculus. I suspect it'll be tied to future hardware as well. Whatsapp has network effects, and may one day have lock-in comparable to Chinese super apps (at least that's what's being worked towards). iMessage is the the main competitor here, because they are automatically installed on every iPhone
Misc
I think Facebook Marketplace, the Craigslist alternative benefits greatly from Facebook using real identities, and is an overall better product. If you want to sell something locally FB Marketplace is the best option, and I think it's a strong reason to have an account. Usage of Marketplace is growing.
The integration with Jio in India, and importance in Indian society is worth mentioning for Whatsapp.
Facebook Groups, have competition in the form of Reddit, and Discord. The edge here will be real identities, and the tools they are building to make moderating a Facebook group profitable (subscriptions, etc)
The only other pure "Real Identity social network" is Linkedin is a professional network.
Problems
No young people use Facebook? This seems to be a US centric cliche, as Facebook is popular among all age demographics around the world. According to Pew Research 76% of people 18-24 use Facebook, only superseded by Youtube. For teens in 2018, 51% of teens used Facebook which is good in my opinion for a social network not targeted to teens like Tik Tok. I personally think the utility of Facebook kicks in after college age, but regardless if there is a problem, I think the cure can be User Acquisition through hardware.
Chance of mass exodus? again, mitigated by the lock-in of hardware, but this is a concern of mine based on Facebook's reputation. 1. Privacy, there is truth to some criticism here, because Facebook's business model does depend on data collection, and in many ways is opposed to strict definitions of privacy, but much of it is also pushed by myth like "Facebook sells data". Facebook has the same business model as its advertising funded peers, but perception is what matters, and Facebook is losing the perception battle. 2. Politics, In my opinion has been half of Facebook's reputation problem. Recently Zuck said that they are trying to make Facebook less political by not recommending political groups, and lowering reach on political posts. Also, Donald Trump being gone should make the next 4 years less politically controversial. Since Facebook is in the business of advertising, and people can mostly say what they want, there's always the small chance of a #DeleteFacebook movement reaching critical mass based on these themes.
Being banned in countries? Mitigated by becoming a hardware player, but this is an unlikely outcome for many reasons that my hands are too tired to elaborate on.
Apple's privacy stance and iOS 14: The hit to revenue estimates I've seen are between 1%-7%, but it could also be a boost to revenue since third party signals being reduced will give the edge to whoever has the best first party signals, we'll have wait to see. This is something to watch closely, but transferring third party data into first party data by having ecommerce on the platform through initiatives like Facebooks shops, and Instagram shopping can be the cure. Also, being in control of hardware mitigates this risk
Antitrust- generally not concerned
Privacy as a theme that is adversarial to advertising - slightly concerned but I don't think ad funded business models are going anywhere, many people like not paying for things
Might add more to this later...

- Share Facts -

• FuboTV, ticker FUBO
• IV: Around 200% this morning on puts expiring Feb-12th
• FUBO earnings date: Estimated to be Feb 5th March 2nd - It was estimated to be Feb 5th by my broker, but news came out after I wrote the original DD that results will be issued March 2nd
• Share Float: 52.06M (as per Yahoo Finance)
• Short % of Float: 72.74% (as of Jan 15th, as per Yahoo Finance)
  • I mention this because FUBO was heavily shorted when the stock rose in the $60’s, and unfortunately shorters succeeded in crashing the price.
  • In the comments someone mentioned short interest is now at 57.98%, although I did not verify this. Nonetheless, short interest above 40-50% is considered quite high
• Market Cap: $2.85 B

​
My position

• Account #1 (Boomer account): 38 shares @ approx. $31 (risk management at play, I'd like to invest more, but it's at the upper limit of how much I'm willing to put in one individual position)
• Account #2 (Theta Gang account): 100 shares @ approx $43 bought this morning, and sold a covered call at $55 strike for $6.10 for Feb-12th. I'm sure I'll regret it, but the yield on both the call itself, and the potential yield if I get called away for downright phenomenal, hard to turn down. Again, I would've done more, but risk management dictates my upper limit for individual stock exposure.
  • Feb-04 Edit: Now that the earnings date has been confirmed, I'm adding 200 shares and selling calls at $45 strike 02/26. Playing on volatility here, but also want to protect myself in case of a pullback. Premiums of roughly $12, so BE is close to $40.

​
- The DD -
What is FuboTV?
Mama Wood said it herself (paraphrasing here): Cable is dying, to hell with cable, we want MOAR STREAMING!!!!!!!!!
Seriously, cable and television plans are dying. Nowadays you have a ton of flexible solutions, from the obvious Netflix and YouTube, to Amazon Prime, Sling TV, Hulu, etc. FUBO is capitalizing on this trend for sports fans. It is the country's first sports-first service. While the price might seem steep, it gives you access to dozens of regional, national and international sports channels, including live events in 4K HDR.
Beyond sports, it offers much more; 112 channels in total, including 43 of the top 50 Nielson-rated networks (Nielson is an American information, data and market measurement firm operating in over 100 countries and employing 44,000 people (says Wikipedia, I’m too retarded to do more research on them). Sample non-sports related channels on FUBO include: A&E, Adult Swim, AMC, BBC America, Bravo, Comedy Central, Nickelodeon, etc. Yes, they even have the Weather Network.
​
Recent acquisitions:
No DD of a hyper fast growing company would be complete without discussing acquisitions.

• Vigtory: The company is in the process of acquiring and integrating Vigtory Inc to the platform. Vigtory is a sportsbook (sports betting). It will also remain available to those not using FuboTV (aka: additional revenues, but also additional marketing for FuboTV)
• Balto: Balto develops tools for users to organize and play fantasy sports games, and FuboTV intends to combine its technology with Balto to launch a free-to-play gaming offering.

​
Management: See here for bio of management. Cliff notes are

• David Gandler: Co-founder, CEO since 2015. Background is 15+ years of video sales in local broadcast and cable TV.
• Alberto Horihuela: Co-founder and CMO. Prior to FuboTV he was head of Latin America for SVOD service DramaFever, which was acquired by Softbank and a part of Warner Bros.; he's a serial entrepreneur, and has also co-founded Premerad Network, where he was CEO
• Simone Nardi: CFO, prior to FUBO he was SVP and CFO for Scripps Networks Interactive, and before that for NBC Universal's international channels and television production businesses.
• Mike Berkley: Chief product Officer, has been in technology fort more than 20 years. He's developed new products and businesses for Spotify, Viacom, Comcast and Axios. He also founded two tech startups.
• Gina DiGioia Sheldon: General Counsel, prior to joining FUBO she was U.S. general counsel and COO for Flizy, a global tech company with products in Europe and Latin America.

​
Some numbers (yes, the quant stuff):
Average revenue per user (ARPU) has gone from $37.93 per month in 2019, to $53.73 in 2019, and to $67.70 in the latest quarter. In contrast, it’s average monthly cost per user has risen from $40.59 in 2018 to $56.78 in the last quarter. Yes, they were obviously operating at a loss, and yes they are now operating at a positive contribution profit. As of the latest quarter, they had 455,000 paid subcribers. Grand news, yes?
Q3 results, and guidance for Q4:
Spoiler alert: The numbers are fantastic.

• Q3: Revenues of $61.2 million, an increase of close to 50% on a YoY basis.
  • Breaking revenues down: Subscription revenues up by 64% at $53.4 million, and advertising revenues up by 153% at $7.5 million
  • Paid subscribers increased by 58% on a YoY basis, and ARPU increased by 14% on a YOY basis. See here the meteoric rise. Sexy, ain’t it?
  • Hours spent watching FuboTV also skyrocketed, an increase of 83% YoY (133.3 million hours). Monthly Active Users watched on average 120h per month. This is a 20% increase YoY
• Q4 guidance: Spoiler alert: They raised their guidance mid quarter because they are so bloody awesome
  • Q4 revenue to be expected between $94 to $98 million, prior guidance was $80 to $85 million. The new guidance represents a 77% to 84% YoY revenue increase
  • Paid subscribers to be expected to exceed 545,000, prior guidance was 500k to 510k. The new guidance represents a 72% YoY increase.

​
What now?
Sure, they are not profitable yet. Big whoop, they are still young, FuboTV was founded in 2015. But you know what? It took ages for Netflix to become profitable (about 7 or 8 years, I believe). The way FUBO is growing their paid subscribers base, and the way the hours are increasing YoY, we can expect them to reach profitability sooner rather than later. When? I don’t have a crystal ball, if I do I’d be a billionaire. We can expect that as they continue to scale up and add more users, they will continue to increase their advertisement revenues (duh), and also that their cost of new client acquisition will become lower (also duh)
​
What are the risks?

• For FUBO to thrive and grow, they need live sports. COVID dented their growth due to professional sports suspending seasons. If we go into another massive lockdown (less and less likely as vaccines ever so slowly roll out), this could cause another dent in their growth.
• It’s still heavily shorted, as the price continues to go up (especially if they smash their guidance), expect some shady shit GME-style from hedge funds to bring the price down.

TLDR: Awesome growth potential, heavily shorted (not at the GME scale, but still heavily shorted so you need to be mindful of that and potential WSB attention to the stock, or potential shady business from shorters).

In the late 1980s and early 1990s when I was a young teen growing up in far North Austin, it was a popular custom for many boys in the neighborhood to assemble at the local Stop-N-Go after school on a regular basis for some Grand Champion level tournaments in Street Fighter 2 and Mortal Kombat. The collective insistence of our mothers and fathers to get out of the house, get some exercise, and refrain from playing NES or Sega on the television only led us to seek out more video games at the convenience store down the road. Much allowance and lunch money was spent as well as hours that should have been devoted to homework among the 8 or 9 regular boys in attendance, often challenging each other to 'Best of 5' matches. I myself played Dhalsim and SubZero, and not very well, so I rarely ever made it to the 5th match. The store workers frequently kicked us out for the day only to have us return when they weren't working the counter anymore if not the next day.
There is something about that which has been lost in the present day. While people can today download the latest games on Steam or PSN or in the app store on your smartphone, you can't just find arcade games in stores and restaurants like you used to be able to. And so the fun of a spontaneous 8 or 10 person multiplayer video game tournament has been confined to places like bars, pool halls, Pinballz or Dave&Busters.
But in truth it was that ubiquity of arcade video games, how you could find them in any old 7-11 or Laundromat, which is what killed the original arcades of the early 1980s before the Great Crash of 1983 when home video game consoles started to catch up to what you saw in the arcade.
I was born in the mid 1970s so I missed out on Pong. I was kindergarten age when the Golden Age of Arcade Games took place in the early 1980s. There used to be a place called Skateworld on Anderson Mill Road that was primarily for roller skating but had a respectable arcade in its own right. It was there that I honed my skills on the original Tron, Pac Man, Galaga, Pole Position, Defender, and so many others. In the 1980s I remember visiting all the same mall arcades as others in my age group. There was Aladdin's Castle in Barton Creek Mall, The Gold Mine in Highland, and another Gold Mine in Northcross which was eventually renamed Tilt. Westgate Mall also had an arcade but being a north austin kid I never went there until later in the mid 1990s. There were also places like Malibu Grand Prix and Showbiz Pizza and Chuck-E-Cheeze, all of which had fairly large arcades for kids which were the secondary attraction.
If you're of a certain age you will remember Einsteins and LeFun on the Drag. They were there for a few decades going back way before the Slacker era. Lesser known is that the UT Student Union basement used to have an arcade that was comparable to either or both of those places. Back in the pre-9/11 days it was much easier to sneak in if you even vaguely looked like you could be a UT student.
But there was another place I was too young to have experienced called Smitty's up further north on 183 at Lake Creek in the early 1980s. I never got to go there but I always heard about it from older kids at the time. It was supposed to have been two stories of wall to wall games with a small snack bar. I guess at the time it served a mostly older teen crowd from Westwood High School and for that reason younger kids my age weren't having birthday parties there. It wasn't around very long, just a few years during the Golden Age of Arcades.
It is with almost-forgotten early arcades like that in mind that I wanted to share with y'all some examples of places from The Golden Age of the Video Arcade in Austin using some old Statesman articles I've found. Maybe someone of a certain age on here will remember them. I was curious what they were like, having missed out by being slightly too young to have experienced most of them first hand. I also wanted to see the original reaction to them in the press. I had a feeling there was some pushback from school/parent/civic groups on these facilities showing up in neighborhood strip malls or next to schools, and I was right to suspect. But I'm getting ahead of myself. First let's list off some places of interest. Be sure to speak up if you remember going to any of these, even if it was just for some other kid's birthday party. Unfortunately some of the only mentions about a place are reports of a crime being committed there, such as our first few examples.
Forgotten Arcade #1
Fun House/Play Time Arcade - 2820 Guadalupe
June 15, 1975

ARCADE ENTHUSIASM
A gang fight involving 20 30 people erupted early Saturday morning in front of an arcade on Guadalupe Street. The owner of the Fun House Arcade at 282J Guadalupe told police pool cues, lug wrenches, fists and a shotgun were displayed during the flurry. Police are unsure what started the fisticuffs, but one witness at the scene said it pitted Chicanos against Anglos. During the fight the owner of the arcade said a green car stopped at the side of the arcade and witnesses reported the barrel of a shotgun sticking out. The crowd wisely scattered and only a 23-year-old man was left lying on the ground. He told police he doesn't know what happened.

March 3, 1976

ARCADE ROBBED
A former employee of Play Time Arcade, 2820 Guadalupe, was charged Tuesday in connection with the Tuesday afternoon robbery of his former business. Police have issued a warrant for the arrest of Ronnie Magee, 22, of 1009 Aggie Lane, Apt. 306. Arcade attendant Sam Garner said he had played pool with the suspect an hour before the robbery. He told police the man had been fired from the business two weeks earlier. Police said a man walked in the arcade about 2:45 p m. with a blue steel pistol and took $180. Magee is charged with first degree aggravated robbery. Bond was set on the charge at $15,000.

First it was called Fun House and then renamed Play Time a year later. I'm not sure what kind of arcade games beyond Pong and maybe Asteroids they could have had at this place. The peak of the Pinball craze was supposed to be around 1979, so they might have had a few pinball machines as well. A quick search of youtube will show you a few examples of 1976 video games like Death Race. The location is next to Ken's Donuts where PokeBowl is today where the old Baskin Robbins location was for many years.
Forgotten Arcade #2
Green Goth - 1121 Springdale Road
May 15, 1984

A 23-year-old man pleaded guilty Monday to a January 1983 murder in East Austin and was sentenced to 15 years in prison. Jim Crowell Jr. of Austin admitted shooting 17-year-old Anthony Rodriguez in the chest with a shotgun after the two argued outside the Green Goth, a games arcade at 1121 Springdale Road, on Jan. 23, 1983. Crowell had argued with Rodriguez and a friend of Rodriguez at the arcade, police said. Crowell then went to his house, got a shotgun and returned to the arcade, witnesses said. When the two friends left the arcade, Rodriguez was shot Several weeks ago Crowell had reached a plea bargain with prosecutors for an eight-year prison term, but District Judge Bob Perkins would not accept the sentence, saying it was shorter than sentences in similar cases. After further plea bargaining, Crowell accepted the 15-year prison sentence.

I can't find anything else on Green Goth except reports about this incident with a murder there. There is at least one other report from 1983 around the time of Crowell's arrest that also refer to it as an arcade but reports the manager said the argument started over a game of pool. It's possible this place might have been more known for pool.
Forgotten Arcades #3 & #4
Games, Etc. - 1302 S. First St
Muther's Arcade - 2532 Guadalupe St
August 23, 1983

Losing the magic touch - Video Arcades have trouble winning the money game
It was going to be so easy for Lawrence Villegas, a video game junkie who thought he could make a fast buck by opening up an arcade where kids could plunk down an endless supply of quarters to play Pac-Man, Space Invaders and Asteroids. Villegas got together with a few friends, purchased about 30 video games and opened Games, Etc. at 1302 S. First St in 1980. .,--.... For a while, things, went great Kids waited in line to spend their money to drive race cars, slay dragons and save the universe.
AT THE BEGINNING of 1982, however, the bottom fell out, and Villegas' revenues fell from $400 a week to $25. Today, Games, Etc. is vacant Villegas, 30, who is now working for his parents at Tony's Tortilla Factory, hasn't decided what he'll do with the building. "I was hooked on Asteroids, and I opened the business to get other people hooked, too," Villegas said. "But people started getting bored, and it wasn't worth keeping the place open. In the end, I sold some machines for so little it made me sick."
VILLEGAS ISNT the only video game operator to experience hard times, video game manufacturers and distributors 'It used to be fairly common to get $300 a week from a machine. Now we rarely get more than $100 .
Pac-Man's a lost cause. Six months ago, you could resell a Pac-Man machine for $1,600. Now, you're lucky to get $950 if you can find a buyer." Ronnie Roark says. In the past year, business has dropped 25 percent to 65 percent throughout the country, they say. Most predict business will get even worse before the market stabilizes. Video game manufacturers and operators say there are several reasons for the sharp and rapid decline: Many video games can now be played at home on television, so there's no reason to go to an arcade. The novelty of video games has worn off. It has been more than a decade since the first ones hit the market The decline can be traced directly to oversaturation or the market arcade owners say. The number of games in Austin has quadrupled since 1981, and it's not uncommon to see them in coin-operated laundries, convenience stores and restaurants.
WITH SO MANY games to choose from, local operators say, Austinites be came bored. Arcades still take in thousands of dollars each week, but managers and owners say most of the money is going to a select group of newer games, while dozens of others sit idle.
"After awhile, they all seem the same," said Dan Moyed, 22, as he relaxed at Muther's Arcade at 2532 Guadalupe St "You get to know what the game is going to do before it does. You can play without even thinking about it" Arcade owners say that that, in a nutshell, is why the market is stagnating.
IN THE PAST 18 months, Ronnie Roark, owner of the Back Room at 2015 E. Riverside Drive, said his video business has dropped 65 to 75 percent Roark, . who supplied about 160 video games to several Austin bars and arcades, said the instant success of the games is what led to their demise. "The technology is not keeping up with people's demand for change," said Roark, who bought his first video game in 1972. "The average game is popular for two or three months. We're sending back games that are less than five months old."
Roark said the market began dropping in March 1982 and has been declining steadily ever since. "The drop started before University of Texas students left for the summer in 1982," Roark said. "We expected a 25 percent drop in business, and we got that, and more. It's never really picked up since then. - "It used to be fairly common to get $300 a week from a machine. Now we rarely get more than $100. 1 was shocked when I looked over my books and saw how much things had dropped."
TO COMBAT THE slump, Roark said, he and some arcade owners last year cut the price of playing. Even that didn't help, he said. Old favorites, such as Pac-Man, which once took in hundreds of dollars each week, he said, now make less than $3 each. "Pac-Man's a lost cause," he said. "Six months ago, you could resell a Pac-Man machine for $1,600. Now, you're lucky to get $950 if you can find a buyer." Hardest hit by the slump are the owners of the machines, who pay $3,500 to $5,000 for new products and split the proceeds with the businesses that house them.
SALEM JOSEPH, owner of Austin Amusement and Vending Co., said his business is off 40 percent in the past year. Worse yet, some of his customers began returning their machines, and he's having a hard time putting them back in service. "Two years ago, a machine would generate enough money to pay for itself in six months,' said Joseph, who supplies about 250 games to arcades. "Now that same machine takes 18 months to pay for itself." As a result, Joseph said, he'll buy fewer than 15 new machines this year, down from the 30 to 50 he used to buy. And about 50 machines are sitting idle in his warehouse.
"I get calls every day from people who want to sell me their machines," Joseph said. "But I can't buy them. The manufacturers won't buy them from me." ARCADE OWNERS and game manufacturers hope the advent of laser disc video games will buoy the market Don Osborne, vice president of marketing for Atari, one of the largest manufacturers of video games, said he expects laser disc games to bring a 25 percent increase in revenues next year. The new games are programmed to give players choices that may affect the outcome of the game, Os borne said. "Like the record and movie industries, the video game industry is dependent on products that stimulate the imagination," Osborne said "One of the reasons we're in a valley is that we weren't coming up with those kinds of products."
THE FIRST of the laser dis games, Dragonslayer and Star Wan hit the market about two months ago. Noel Kerns, assistant manager of The Gold Mine Arcade in Northcross Mall, says the new games are responsible for a $l,000-a-week increase in revenues. Still, Kerns said, the Gold Mine' total sales are down 20 percent iron last summer. However, he remain optimistic about the future of the video game industry. "Where else can you come out of the rain and drive a Formula One race car or save the universe?" hi asked.
Others aren't so optimistic. Roark predicted the slump will force half of all operators out of business and will last two more years. "Right now, we've got a great sup ply and almost no demand," Roark said. "That's going to have to change before things get- significantly better."

Well there is a lot to take from that long article, among other things, that the author confused "Dragonslayer" with "Dragon's Lair". I lol'd.
Anyone who has been to Emo's East, formerly known as The Back Room, knows they have arcade games and pool, but it's mostly closed when there isn't a show. That shouldn't count as an arcade, even though the former owner Ronnie Roark was apparently one of the top suppliers of cabinet games to the area during the Golden Era. Any pool hall probably had a few arcade games at the time, too, but that's not the same as being an arcade.
We also learn from the same article of two forgotten arcades: Muthers at 2522 Guadalupe where today there is a Mediterranean food restaurant, and another called Games, Etc. at 1302 S.First that today is the site of an El Mercado restaurant. But the article is mostly about showing us how bad the effects were from the crash at the end of the Golden Era. It was very hard for the early arcades to survive with increasing competition from home game consoles and personal computers, and the proliferation of the games into stores and restaurants.
Forgotten Arcades #5 #6 & #7
Computer Madness - 2414 S. Lamar Blvd.
Electronic Encounters - 1701 W Ben White Blvd (Southwood Mall)
The Outer Limits Amusements Center - 1409 W. Oltorf
March 4, 1982

'Quartermania' stalks South Austin
School officials, parents worried about effects of video games
A fear Is haunting the video game business. "We call it 'quartermania.' That's fear of running out of quarters," said Steve Stackable, co-owner of Computer Madness, a video game and foosball arcade at 2414 S. Lamar Blvd. The "quartermania" fear extends to South Austin households and schools, as well. There it's a fear of students running out of lunch money and classes to play the games. Local school officials and Austin police are monitoring the craze. They're concerned that computer hotspots could become undesirable "hangouts" for students, or that truancy could increase because students (high-school age and younger) will skip school to defend their galaxies against The Tempest.
So far police fears have not been substantiated. Department spokesmen say that although more than half the burglaries in the city are committed by juveniles during the daytime, they know of no connection between the break-ins and kids trying to feed their video habit But school and parental worries about misspent time and money continue. The public outcry in September 1980 against proposals to put electronic game arcades near two South Austin schools helped persuade city officials to reject the applications. One proposed location was near Barton Hills Elementary School. The other was South Ridge Plaza at William Cannon Drive and South First Street across from Bedlchek Junior High School.
Bedichek principal B.G. Henry said he spoke against the arcade because "of the potential attraction it had for our kids. I personally feel kids are so drawn to these things, that It might encourage them to leave the school building and play hookey. Those things have so much compulsion, kids are drawn to them like a magnet Kids can get addicted to them and throw away money, maybe their lunch money. I'm not against the video games. They may be beneficial with eye-hand coordination or even with mathematics, but when you mix the video games during school hours and near school buildings, you might be asking for problems you don't need."
A contingent from nearby Pleasant Hill Elementary School joined Bedichek in the fight back in 1980, although principal Kay Beyer said she received her first formal call about the games last Week from a mother complaining that her child was spending lunch money on them. Beyer added that no truancy problems have been related to video game-playing at a nearby 7-11 store. Allen Poehl, amusement game coordinator for Austin's 7-11 stores, said company policy rules out any game-playing by school-age youth during school hours. Fulmore Junior High principal Bill Armentrout said he is working closely with operators of a nearby 7-1 1 store to make sure their policy is enforced.
The convenience store itself, and not necessarily the video games, is a drawing card for older students and drop-outs, Armentrout said. Porter Junior High principal Marjorie Ball said that while video games aren't a big cause of truancy, "the money (spent on the games) is a big factor." Ball said she has made arrangements with nearby businesses to call the school it students are playing the games during school hours. "My concern is that kids are basically unsupervised, especially at the 24-hour grocery stores. That's a late hour for kids to be out. I would like to see them (games) unplugged at 10 p.m.," adds Joslin Elementary principal Wayne Rider.
Several proprietors of video game hot-spots say they sympathize with the concerns of parents and school officials. No one under 18 is admitted without a parent to Chuck E. Cheese's Pizza Time Theatre at 4211 S. Lamar. That rule, says night manager David Dunagan, "keeps it from being a high school hangout. This is a family place." Jerry Zollar, owner of J.J. Subs in West Wood Shopping Center on Bee Cave Road, rewards the A's on the report cards of Eanes school district students with free video games. "It's kind of a community thing we do in a different way. I've heard from both teachers and parents . . . they thought this was a good idea," said Zollar.
Electronic Encounters in Southwood Mall last year was renovated into a brightly lit arcade. "We're trying to get away from the dark, barroom-type place. We want this to be a place for family entertainment We won't let kids stay here during school hours without a written note from their parents, and we're pretty strict about that," said manager Kelly Roberts. Joyce Houston, who manages The Outer Limits amusements center at 1409 W. Oltorf St. along with her husband, said, "I wouldn't let my children go into some of the arcades I've visited. I'm a concerned parent, too. We wanted a place where the whole family could come and enjoy themselves."

Well you can see which way the tone of all these articles is going. There were some crimes committed at some arcades but all of them tended to have a negative reputation for various reasons. Parents and teachers were very skeptical of the arcades being in the neighborhoods to the point of petitioning the City Government to restrict them. Three arcades are mentioned besides Chuck-E-Cheese. Electronic Encounters in Southwood Mall, The Outer Limits amusements center at 1409 W. Oltorf, and Computer Madness, a "video game and foosball arcade" at 2414 S. Lamar Blvd.
Forgotten Arcade #8
Smitty's Galaxy of Games - Lake Creek Parkway
February 25, 1982

Arcades fighting negative image
Video games have swept across America, and Williamson and Travis counties have not been immune. In a two-part series, Neighbor examines the effects the coin-operated machines have had on suburban and small-town life.
Cities have outlawed them, religious leaders have denounced them and distraught mothers have lost countless children to their voracious appetites. And still they march on, stronger and more numerous than before. A new disease? Maybe. A wave of invading aliens from outer space? On occasion. A new type of addiction? Certainly. The culprit? Video games. Although the electronic game explosion has been mushrooming throughout the nation's urban areas for the past few years, its rippling effects have just recently been felt in the suburban fringes of North Austin and Williamson County.
In the past year, at least seven arcades armed with dozens of neon quarter-snatchers have sprung up to lure teens with thundering noises and thousands of flashing seek-and-destroy commands. Critics say arcades are dens of iniquity where children fall prey to the evils of gambling. But arcade owners say something entirely different. "Everybody fights them (arcades), they think they are a haven for drug addicts. It's just not true," said Larry Grant of Austin, who opened Eagle's Nest Fun and Games on North Austin Avenue in Georgetown last September. "These kids are great" Grant said the gameroom "gives teenagers a place to come. Some only play the games and some only talk.
In Georgetown, if you're from the high school, this is it." He said he's had very few disturbances, and asks "undesirables" to leave. "We've had a couple of rowdies. That's why I don't have any pool tables they tend to attract that type of crowd," Grant said.
Providing a place for teens to congregate was also the reason behind Ron and Carol Smith's decision to open Smitty's Galaxy of Games on Lake Creek Parkway at the entrance to Anderson Mill. "We have three teenage sons, and as soon as the oldest could drive, it became immediately apparent that there was no place to go around here," said Ron, an IBM employee who lives in Spicewood at Balcones. "This prompted us to want to open something." The business, which opened in August, has been a huge success with both parents and youngsters. "Hundreds of parents have come to check out our establishment before allowing their children to come, and what they see is a clean, safe environment managed by adults and parents," Ron said. "We've developed an outstanding rapport with the community." Video arcades "have a reputation that we have to fight," said Carol.
Kathy McCoy of Georgetown, who last October opened Krazy Korner on Willis Street in Leander, agrees. "We've got a real good group of kids," she said. "There's no violence, no nothing. Parents can always find their kids at Krazy Korner."
While all the arcade owners contacted reported that business is healthy, if not necessarily lucrative, it's not as easy for video entrepreneurs to turn a profit as one might imagine. A sizeable investment is required. Ron Smith paid between $2,800 and $5,000 for each of the 30 electronic diversions at his gameroom.
Grant said his average video game grosses about $50 a week, and his "absolute worst" game, Armor Attack, only $20 a week. The top machines (Defender and Pac-Man) can suck in an easy $125 a week. That's a lot of quarters, 500 to be exact but the Eagle's Nest and Krazy Korner pass half of them on to Neelley Vending Company of Austin which rents them their machines. "At 25 cents a shot, it takes an awful lot of people to pay the bills," said Tom Hatfield, district manager for Neelley.
He added that an owner's personality and the arcade's location can make or break the venture. The game parlor must be run "by an understanding person, someone with patience," Hatfield said. "They cannot be too demanding on the kids, yet they can't let them run all over them." And they must be located in a spot "with lots of foot traffic," such as a shopping center or near a good restaurant, he said. "And being close to a school really helps." "Video games are going to be here permanently, but we're going to see some operations not going because of the competition," which includes machines in virtually every convenience store and supermarket, Hatfield said.

This article talks about three arcades. One in Georgetown called Eagles Nest, another in Leander called Krazy Korner, and a third called Smitty's Galaxy of Games on Lake Creek Parkway "on the fringes of North Austin". This is the one I remember the older kids talking about when I was a little kid. There was once a movie theater across the street from the Westwood High School football stadium and behind that was Smitty's. Today I think the building was bulldozed long ago and the space is part of the expanded onramp to 183 today. Eventually another unrelated arcade was built next to the theater that became Alamo Lakeline. It was another site of some unrecorded epic Street Fighter 2 and Mortal Kombat tournaments in the 90s.
But the article written before the end of the Golden Era tell us much about the pushback I was talking about earlier. Early arcades were seen as "dirty" places in some circles, and the owners of the arcades in Williamson County had to stress how "clean" their establishments were. This other article from a couple of weeks later tells of how area school officials weren't worried about video games and tells us more arcades in Round Rock and Cedar Park. Apparently the end of the golden age lasted a bit longer than usual in this area.
At some point in the next few years the bubble burst, and places like Smitty's were gone by the late 80s. But the distributors quoted earlier were right that arcade games weren't going completely away. In the mid 1980s LeFun opened up next in the Scientology building at 2200 Guadalupe on the drag. Down a few doors past what used be a coffee shop and a CVS was Einsteins Arcade. Both of those survived into the 21st century. I remember the last time I was at Einsteins I got my ass beat in Tekken by a kid half my age. heheh
That's all for today. There were no Bonus Pics in the UT archive of arcades (other than the classical architectural definition). I wanted to pass on some Bonus newspaper articles (remember to click and zoom in with the buttons on the right to read) about Austin arcades anyway but first a small story.
I mentioned earlier the secret of the UT Student Union. I have no idea what it looks like now but in the 90s there was a sizable arcade in with the bowling alley in the basement. Back in 1994 when I used to sneak in, they featured this bizarre early attempt at virtual reality games. I found an old Michael Barnes Statesman article about it dated February 11, 1994. Some highlights:

Hundreds of students and curiosity-seekers lined up at the University of Texas Union to play three to five minutes of Dactyl Nightmare, Flying Aces or V-Tol, three-dimensional games from Kramer Entertainment. Nasty weather delayed the unloading of four huge trunks containing the machines, which resemble low pulpits. Still, players waited intently for a chance to shoot down a fighter jet, operate a tilt-wing Harrier or tangle with a pterodactyl. Today, tickets will go on sale in the Texas Union lobby at 11:30 a.m. for playing slots between noon and 6 p.m.
Players, fitted with full helmets, throttles and power packs, stood on shiny gray and yellow platforms surrounded by a circular guard rail. Seen behind the helmet's goggles were computer simulated landscapes, not unlike the most sophisticated video games, with controls and enemies viewed in deep space. "You're on a platform waiting to fight a human figure," said Jeff Vaughn, 19, of Dactyl Nightmare. "A pterodactyl swoops down and tries to pick you up. You have to fight it off. You are in the space and can see your own body and all around you. But if you try to walk, you have to use that joy stick to get around."
"I let the pterodactyl carry me away so I could look down and scan the board," said Tom Bowen of the same game. "That was the way I found out where the other player was." "Yeah, it's cool just to stand there and not do anything," Vaughn said. The mostly young, mostly male crowd included the usual gaming fanatics, looking haggard and tense behind glasses and beards. A smattering of women and children also pressed forward in a line that snaked past the lobby and into the Union's retail shops.
"I don't know why more women don't play. Maybe because the games are so violent," said Jennifer Webb, 24, a psychology major whose poor eyesight kept her from becoming a fighter pilot in real life. "If the Air Force won't take me, virtual reality will." "They use stereo optics moving at something like 60 frames a second," said computer science major Alex Aquila, 19. "The images are still pretty blocky. But once you play it, you'll want to play it again and again." With such demand for virtual reality, some gamesters wondered why an Austin video arcade has not invested in at least one machine.

The gameplay looked like this.
Bonus Article #1 - "Video fans play for own reasons" (Malibu Grand Prix) - March 11, 1982
Bonus Article #2 - "Pac-Man Cartridge Piques Interest" - April 13, 1982
Bonus Article #3 - "Video Games Fail Consumer" - January 29, 1984
Bonus Article #4 - "Nintendoholics/Modems Unite" - January 25, 1989
Bonus Article #5 and pt 2 "Two girls missing for a night found at arcade" (truly dedicated young gamers) - August 7, 2003

After a good launch for my game, i started to get some random questions from users across all the channels, but there were one user on reddit (u/TamoorGames) who had many questions and he sent them in a very nice and organized way (mostly asking about the Xbox and Nintendo Switch for each question), i did answer him. Although i own the answers, i did ask his permission to put his questions alongside my answers in public, just in case it can help someone. So, Enjoy it, and feel free to AMA.
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Q.1: Have you signed up as Individual or as a company? Or enrolled into Xbox Creator Program? Can you please share the overall process in a quick brief.
- Singed by myself for both platforms, i only had to contact the ID@Xbox team, show them my game, they first didn't approve it as it was not polished enough, so i did try once more time after a couple of years, and then it was approved, and everything started from there. No not Creator Program, and tbh i don't even know what is Creator Program, will google it later.
For Nintendo, I did reach out the Nindies guy who was always on the youtube videos and on twitter (he left by now, a new guy came, and that new guy just left a year ago or so). But in general, this is how i showed my game, just reaching out the nindies team leader.
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Q.2: From which country you’d signed up? Is the Xbox Developer program available for developers all around the world? I’ll signup from Pakistan
- I did from China while I'm not Chinese, i would say Microsfot is the most open company, they don't have per region issues, like for example if you are in China and try to sort things with Sony or Nintendo, it won't be that easy...not at all. Because you've then to go through Japan office (due to region), but then you targeting the western market and English only game...it becomes a lot of communications and troubles.
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Q.3: Can we publish any game on Xbox? Or first we need to get concept approval from Xbox and then we can start our development. Or does Xbox have any categories on which we can only develop our games? e.g. shooting, puzzle etc
- While the certain answer for this question is not from me, but I would say any game. Xbox & Switch are platforms, mostly for gaming, despite the fact there are some apps in there (YouTube, Netflix,...etc.) so whatever your game genre or type is, I'm sure if they like it they won't mind it on their platform.
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Q.4: Which Game engine have you used to develop your game? I am using UNITY. Is it good for Xbox or i’ve to consider any other game engine?
- Unreal. Any Engine is good for any platform. Don't let the engine be your biggest issue, we're are in 2020, all Engines are great and most of them are cross platform. if you are not so confident about Unity, you can just remember it made Cuphead, Ori franchise, Max & Magic Marker, and many more Xbox exclusives. And if we start thinking about Unity games made for Switch, we will have endless list! Even more than Unreal based titles, as Unity already prove that it is super optimized engine for Nintendo devices since the WiiU and 3ds.
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Q.5: Can you please share the list of Hardware that you used for Xbox development and testing? E.g. Does Xbox have their own development kit or we can test our game on any Xbox? Which Xbox you used?
- Yes, i used devkits. With that said, i learned that any Xbox One (consumer device) can be turned to a devkit mode. I tested my game on Xbox One S & Xbox one X (the weakest and the Powerful one, so i can grantee the performance).
For Nintendo, i can't explain what hardware i did use, but once you are approved you've access to the documentations where you can read about the different hardware types, and then you can based on your use and game type or development type request the hardware that you need.
But all in all, for any platform, you need their hardware (aka devkit). And at least one device per platform.
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Q.6: What are the main reasons for rejection from Xbox? And what factors do I need to consider while developing my game?
- If you mean rejected as a project to be released on the platform, I guess when my game rejected first time, because it hasn't a "Full playable loop". Start, Play, End, Restart if you want. It was a punch of levels, not connected, no UI & lots of Debug menus. Xbox team (or any other platform) they need a very clean and clear vision so they can decide..
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Q.7: What kind of Legal document and other Document Xbox require? This will help me to save time by preparing in advance.
- Most of the documents as far as i can remember, they send to you. You don't produce documents, you just read and sign (of course if you find it make sense and nothing against your goals or considerations). Xbox was the least demanding, Nintendo was fine, no magical papers were requested. But Sony for example would require your last fiscal year revenue breakdown and documents to proof that!
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Q.8: Do Xbox have their own tools for leaderboard, cloud, ranking & in-app purchases?
- Any Xbox player already know, all that called Xbox Live (which is a set of services), and most of the engines does have high level interface to deal with those services. Don't worry :) and there is always documentations and pages to help you, either at Xbox websites or at the engine (Unity at your case) site.
For Nintendo it is different, i don't have any online features in my game, because online in Nintendo is treated differently, where any user on Xbox have online access and online features, in Nintendo the online features you purchase as a product (per month, per year,...etc.), so it is common to find many games doesn't have leaderboard or clouds save,...etc.
But again, all engines already have the high level interface for those features, regardless you will support them or no.
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Q.9: Can you please share the complexities of the Xbox development as you’d mentioned in your message? Like which development steps i can follow to avoid delays and rejections (Any Tips and Tricks)
- I was already familiar with the platform[s] (remember I'm already a game engine programmer), but what was new and seemed complex to me was the "rules" of the platform. Those are things you must read about at your first days of developing for the platform, due to NDA i can't talk further about that. But what i meant by the rules it is for example how to save, when to save, for example a platform would give you limit/bandwidth for saving calls per second, where other platform won't care and give you unlimited calls. Or what is the status of a player while playing (online/offline), some platforms won't care, where others would care a lot about that. Can a player change account while playing or not, some platforms would require, where others would not even allow.....etc. those are thing that vary between the different platforms, and they were the reason for any rejection i had (the ignorance of the rules). Because even if your game is already complete and finished before the port, the port to a platform is not just hit "Build", you have to "re-adapt" the game for the platform.
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Q.10: What advice would you like to give yourself, if you are starting today as an Xbox Developer?
- Don't rush things. And try to "Understand" the reason behind any thing in the platform. If you just adapt the game for the platform rules, you will have lots of complications, because you could make something to fit a rule, but it break with another rule. If you understand perfectly the platform, and the reason behind everything, you will not suffer during development.
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Q.11: What are the things you wished you knew when you were starting as an Xbox Developer?
- as i said, the platform set of rules. It takes time to know them correctly.
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Q.12: Can you please share any other tips and tricks or would like to add any point/Question if i am missing?
- just focus on the game more than on what platforms you need to target. If your game is good, solid, bug free, the platform stuff won't take much time. Also some info about how to be recognized by platforms could be changed, I've been Nintendo developer for long time, even before the Switch device announced, and I've been Xbox developer since 2014 i guess, when the ID program was announced. So things might be different, might be easier or might be harder now, not quite sure.
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Finally, few more points:

• I'll tag him as soon as i get his approval, i wanted to put his name, but yet there is no answer from him.
• All questions were duplicates, one version for Xbox and other version for Nintendo Switch, for the sake of making this shorter, i put the Xbox question version only, but each answer is about both.
• I wanted to put all those in Audio/Video format, but dunno, it is not my thing, and I'm not good at it.
• The game (if you're interested) is Chickens Madness, which is now on Steam, Xbox& Switch. Solo developed in 7 years.
• This is my twitter handle, follow if you're interested in the upcoming adventures :)

December and January aren't typically busy months for initial public stock offerings, but this time around, they'll be an exception. Almost a half dozen well-known tech startups, each already valued privately at over $1 billion, have recently filed for IPOs, including Airbnb, DoorDash, and Roblox.
They're hoping to take advantage of strong investor appetite for tech stocks, despite the pandemic, and to catch the coat tails of other tech companies that have recently made successful debuts. Shares in cloud database company Snowflake are up 129% since its September IPO and those of data mining company Palantir are up 215% since its September listing.
Here are key details to consider in weighing whether to invest in the latest batch of would-be public tech companies. Financial data is from the first nine months of 2020 unless otherwise indicated.

Affirm

Symbol: AFRM Fiscal 2020 revenue: $510 million (fiscal year ended June 30) Revenue growth: 93% Gross margin: n/a Net loss: $113 million
Affirm’s S-1 filing
Founded in 2012 by PayPal co-founder Max Levchin, Affirm aims to bring credit and lending to customers of all kinds of online retailers. Those hard-to-miss layaway offers for a pair of shoes from Cole Haan or that cute coffee table on West Elm’s website? Affirm works behind the scenes to process the loans and often covers the cost of the item (in some cases, partner banks fund the loans). So far, Affirm has signed up over 6,500 retailer and helped consumers pay for almost $11 billion worth of products over the past three years.
Pros: Affirm says its “buy now, pay later” system is superior to credit cards, with no hidden fees or high interest rates (most Affirm offers are zero interest rate). Like other hot consumer companies, Affirm also touts its net promoter score of 78, suggesting more than three-quarters of customers would recommend the company. As e-commerce grows, there’s plenty of room for growth in the market—less than 1% of e-commerce transactions in North America relied on “buy now pay later” deals. And Affirm says its data analysis of consumers’ ability to pay lets it avoid major losses.
Cons: The largest e-commerce sites, like Amazon and Walmart, have no need for Affirm and could even launch their own lending services. So could big banks or other financial institutions that can borrow money more cheaply than Affirm can. And more than one-quarter of all of Affirm’s lending has so far come from customers of a single retail partner: Peloton.

Airbnb

Symbol: ABNB First nine months of 2020 revenue: $2.52 billion Revenue growth: -32% Gross margin: 74% Net loss: $697 million
Airbnb’s S-1 filing
As the now-famous story goes, Airbnb co-founders Brian Chesky and Joe Gebbia decided to rent some airbeds in their San Francisco apartment after a big design conference caused local hotels to be fully booked. Their little web site, AirBedandBreakfast.com, eventually grew into the titan that has rented space to 825 million customers cumulatively across 220 countries.
Pros: The fast-growing startup took a huge hit when COVID-19 curbed travel, but has since almost bounced back. Bookings were down 72% in April compared to the same month in 2019, but for June through September, the declined narrowed to 19% to 23%. The company also brags in its regulatory filing that pandemic-related spending cuts, including slashing headcount by 25%, make it more efficient going forward.
Cons: The pandemic showed that the travel industry is subject to sharp downturns that cut into Airbnb’s sales, and infections are on the rise again worldwide. The company has also battled restrictive rules in many cities and countries seeking to ban short-term rentals. Airbnb's filing disclosed it’s also in a battle with the Internal Revenue Service that could cost it $1.4 billion if it loses. And even after being in business for more than a decade, Airbnb is still on pace to lose around $1 billion this year.

DoorDash

Symbol: DASH First nine months of 2020 revenue: $1.92 billion Revenue growth: 226% Gross margin: 53% Net loss: $149 million
DoorDash S-1 filing
After moving to the U.S. as a child, DoorDash co-founder and CEO Tony Xu worked as a dishwasher in a Chinese restaurant to help make ends meet. The point of DoorDash, he says, is to help strivers and small businesses thrive. Now in business for seven years, DoorDash “dashers” deliver food and other items from almost 400,000 businesses to 18 million consumers per month as of September.
Pros: DoorDash is the leading provider of delivery with over twice the market share of runner up Uber Eats as of October 2020. The pandemic has ignited much faster growth in food delivery as people avoid going out to eat. Some smaller players have already sold out (DoorDash bought Square’s Caviar service for $410 million last year), but further consolidation could let DoorDash charge more for its services.
Cons: Once the pandemic passes, many DoorDash customers may return to eating in restaurants. Although California voters approved a measure to continue to classify gig workers like DoorDash’s dashers as independent contractors, other governments still are trying to classify gig workers as employees, which could wreck DoorDash’s business model.

Roblox

Symbol: RBLX First nine months of 2020 revenue: $589 million Revenue growth: 68% Gross margin: 74% Net loss: $206 million
Roblox S-1 filing
Much more than a video game, Roblox has become a virtual environment for millions of people and companies to create their own games. Co-founders David Baszucki and Erik Cassel went from making software simulations for physics labs to creating Roblox in 2004. Now some 31 million people play daily, including three-quarters of all U.S. kids age 9 to 12, the company says (Research firm Dubit put the figure at half of kids 9 to 12 this summer).
Pros: Roblox has plenty of reasons for developers to stick around, including its large devoted customer base and the Lua scripting language that makes it easier to make new games. About two-thirds of current users are from the U.S. and Canada, so there is room for considerable overseas expansion.
Cons: The pandemic super-charged Roblox growth rate, but kids may decide to put their screens down and play more outside after the crisis ends. Many users play on devices running Apple or Google software, putting Roblox somewhat at the mercy of the twin tech titans’ app policies. Other games have been banned and the app stores decide how much of each sale they are entitled to. A joint venture with Tencent to bring Roblox to China could be impacted by increasing trade tensions or new restrictions. And gaming and social media platforms come and go depending on the latest fads. Roblox could be the MySpace of gaming.

Wish (ContextLogic)

Symbol: WISH First nine months of 2020 revenue: $1.75 billion Revenue growth: 32% Gross margin: 65% Net loss: $176 million
Wish S-1 filing
Overshadowed by better known rivals like Amazon, Alibaba, and eBay, Wish focuses its e-commerce services on the “affordable” segment of consumers. Founded in 2010, Wish now helps more then 500,000 online sellers hawk goods to 100 million monthly active shoppers. Parent company ContextLogic has its name on the IPO registration filing.
Pros: Shopping online isn’t just for the wealthy. Wish says it's targeting the 44% of U.S. consumers and 85% of Europeans who have household incomes of $75,000 or less, plus shoppers in developing countries. Wish’s platform is mobile first, and 90% of purchases happen via its mobile app. Although Wish doesn't make a profit, it generated free cash flow (or cash from operating activities minus purchases of property and equipment) of $23 million in the first nine months of 2020.
Cons: Wish faces off against many larger rivals, such as Amazon, Alibaba and eBay, plus Shopify and Walmart. To compete against the giants, Wish spends vast sums, over $1 billion so far in 2020, on marketing. With deep connections in China, U.S.-based Wish could be hurt by worsening trade tensions. And as with other startups dependent on mobile apps, Google and Apple could undermine Wish’s business with new rules or requirements.
Source

Funko (FNKO)
Share Price (2/9/21) : $13.30
Share Price (09/16/19) : $27.86
Short Interest (1/26/21) : 14%
Next Earnings Release: March 2021
Updating a previous DD post on Funko Toys with additional data points from the earnings releases of two major toy companies (Mattel and Hasbro). Strong toy sales performance from both companies suggests that Funko sales should be solid when they report in March.

Here are some highlights on the two major toy companies below with additional detail on each company’s performance in the body of this post:
· Q1 2021 sales volumes continue strong in January; following a robust Q4 in 2020
· E-commerce is a major driver of toy sales during the holidays and in a “COVID World”
· The toy segment has recovered quickly from the industry challenges faced in early 2020
· Very strong sales growth in North America & Europe; slower growth in LatAM and Asia
· Mattel and Hasbro’s sales performance aligns well with other data points suggesting that the toy industry overall was strong during Q4 2020 and will continue to do well in 2021

SUMMARY FROM THE ORIGINAL FUNKO DD
Funko Inc. is an American company that manufactures licensed pop culture collectibles, best known for its licensed vinyl figurines and bobbleheads. They have over 1,000 licenses across music, video games, film, TV, sports and many other pop culture properties. Some of their most popular licensed brands include Marvel, Disney, Star Wars, Pokemon, Fortnite, NBA, NFL, MLB, DC Comics, and a variety of anime properties.
Several points below support the belief that Funko’s revenue grew during the 2020 holiday season and could continue well into 2021:
· Increasing search traffic for Funko products
· Direct sales growth is driving increased revenue and profitability
· Parents are buying more gifts for their kids due to COVID
· People have more disposable income from staying at home and not going out
· Expansion of new products and licensees continuing through 2021
· Collectible investments like Funko POP! figures are exploding in value and popularity
· Recent analyst commentary, valuation, and financials are positive

MATTEL - KEY INSIGHTS FROM THEIR Q4 2020 EARNINGS RELEASE (Feb 9th)
It was a “banner quarter” with Mattel's “best performance in years,” per the CEO.
· Total revenue up 10% during Q4 2020 (vs. Q4 2019)
> North America up 13%; International up 8%
> Achieved revenue growth in all four regions in constant currency
> Highest 4th quarter growth rate in 15 years
o EMEA up 12%
o Latin America up 3%
o Asia Pacific up 8%
· Gross margins were up 300 basis points to 51.4%
· Adjusted EBITDA was up 53% to $284 million
· “The fourth quarter and full year demonstrated the resilience of the toy industry and the priority that parents place on quality toys, trusted brands, and purposeful play” - Ynon Kreiz, Mattel Chairman & CEO
Segment sales accelerated in Q4 2020 (vs. the prior three quarters)
· Dolls:
> Up 13% in Q4 2020 (vs. up 11% in constant currency for full year 2020)
> Includes "Barbie" and "American Girl" brands
· Infant, Toddler, & Preschool:
> Up 7% in Q4 2020 (vs. down 8% in constant currency for full year 2020)
> Includes "Fisher-Price" and "Thomas & Friends" brands
· Vehicles:
> Up 12% in Q4 2020 (vs. up 3% in constant currency for full year 2020)
> Includes "Hot Wheels" brand
· Action figures, Building Sets, & Games:
> Up 9% in Q4 2020 (vs. up 2% in constant currency for full year 2020)
> Includes "Star Wars," "MEGA," and "Uno" brands
E-commerce maintained strong momentum during Q4 2020
· POS was up more than 40% (vs. Q4 2019)
· Represents more than 35% of global POS
HASBRO - KEY INSIGHTS FROM THEIR Q4 2020 EARNINGS RELEASE (Feb 8th)
Sales in 2021 are starting off strong; extending the longer than normal holiday season
· Strong consumer demand starting in Oct 2020 continuing through Jan 2021
· January 2021 POS sales are up nearly 30% vs. the same time the prior year
· “Weeks following Christmas have been incredibly strong. And in January, we are actually seeing an acceleration. I think as people get gift cards and as people who weren’t together for the holidays, and sends presents and other gifting, gift cards and other formats, we’re just seeing an immense amount of consumption of Hasbro brands and products, lots of strong launches coming as we move our way through the first quarter.” – Brian Goldner; Hasbro CEO
· Hasbro believes they can deliver mid single-digit revenue growth in 2021
> “This year, and we believe we’ll be in line with or ahead of the industry depending on where they land. But again, I’ve said around mid single-digits is in a good, robust year is where we should be able to deliver toys and games growth.” – Brian Goldner; Hasbro CEO
Net revenue increase of 4% during Q4 2020 (vs. Q4 2019)
· US and Canada segment revenues up 16%
· Hasbro gaming segment up 21%
· Franchise brands up 7%
· Gains in US and Canada offset by sales declines in LatAM and Asia
· Hasbro had strong performance during Q4 despite tough comparables to the prior year where they were drafting off of Frozen’s strong sales performance
E-commerce revenues were up 43% in 2020 (reaching $1 billion for the first time)
· E-commerce was approximately 30% of global revenues in 2020
· E-commerce POS up 19% during the Q4 2020
· “Pure-play and omni-channel retailers led this growth and omni-channel made significant strides to double their e-comm revenue for the year. Our teams work closely with retailers to expand their online offerings as many added click and collect to their capabilities during the year. With channel support and innovative tailored product, Hasbro also grew revenues with the fan channel last year.” – Brian Goldner; Hasbro
Hasbro continues to reduce its reliance on China in 2020 by diversifying manufacturing as a way to reduce supply shocks and potential tariffs in a China trade war
· “In addition to our global retail network, our global supply chain capabilities and our evolving geographic manufacturing supplier base were essential to meeting demand. Due to COVID and changing consumer behaviors, we had disruptions from production to logistics, but the team worked tirelessly to meet the demand and successfully execute the year. We added new e-comm capabilities and identified opportunities to further enhance these going forward. We continued to diversify our manufacturing, reducing our reliance on any one country, ending 2020 with approximately 55% of production in China.”
> For comparison, 70% of Funko’s goods were produced outside of China as of late 2019.
Latin America and Asia were down in 2020 given e-commerce is underdeveloped
· “As we discussed throughout the year, Latin America was challenging. The toy and game market declined. Retailers were closed. E-comm is underdeveloped. And we reduced our inventory at retail. This impacted 2020 revenue and margins and we are now better positioned to stabilize the business and drive profit improvement this year.” – Deb Thomas; Hasbro EVP & CFO
· “To better help you understand the components of cost of sales we included the 2020 breakdown in our earnings presentation today. The improvements were partially offset by additional markdowns in Latin America and Asia to reduce inventory levels at retail.” – Deb Thomas; Hasbro EVP & CFO
TL;DR:
After a tough summer, Funko sales have rocketed back in Q3 to near where they were pre-pandemic; setting up a potentially historic earnings for Q4 2020. Google search activity suggests that Funko is as popular as ever and is set up well for a strong year in 2021. People are spending less on “going out;” instead buying things to use at home and presents for their kids. As time passes, Funko’s status as a popular collectible only continues to gain momentum.
Their direct sales initiative allows Funko to capture additional margin by sidestepping traditional brick and mortar retail to reach their customers. Investments in collectible products like Pops! and sports cards continue to increase in popularity and price. And the company continues to release even more products beyond Pops!; including games and apparel. While some Wall Street Analysts have already begun to take notice, a strong Q4 earnings announcement can drive even more attention to the stock. Additionally, strong earnings releases from Mattel and Hasbro bode well for Funko when they release their Q4 2020 numbers in the coming weeks.
Positions: Long Shares & Calls
Disclosure: I am long FNKO. This is not investment advice. I reserve the right to buy or sell FNKO without updating this thread. Do your own research and share (or not share) with the community in this thread. Thank you to the others on Reddit that shared this idea earlier.
Feedback: If you have any additional information, ideas, or critiques please make sure to comment. It is great to get the perspective of others when making an investment.
Previous DD: Herman Miller, Funko

NEW INFO 5 Results from share redemption are posted. Less than .2% redeemed. Very bullish as investors are showing extreme confidence in the future of PLBY.
https://finance.yahoo.com/news/playboy-mountain-crest-acquisition-corp-120000721.html
NEW INFO 4 Definitive Agreement to purchase 100% of Lovers brand stores announced 2/1.
https://www.streetinsider.com/Corporate+News/Playboy+%28MCAC%29+Confirms+Deal+to+Acquire+Lovers/17892359.html
NEW INFO 3 I bought more on the dip today. 5081 total. Price rose AH to $12.38 (2.15%)
NEW INFO 2 Here is the full webinar.
https://icrinc.zoom.us/rec/play/9GWKdmOYumjWfZuufW3QXpe_FW_g--qeNbg6PnTjTMbnNTgLmCbWjeRFpQga1iPc-elpGap8dnDv8Zww.yD7DjUwuPmapeEdP?continueMode=true&tk=lEYc4F_FkKlgsmCIs6w0gtGHT2kbgVGbUju3cIRBSjk.DQIAAAAV8NK49xZWdldRM2xNSFNQcTBmcE00UzM3bXh3AAAAAAAAAAAAAAAAAAAAAAAAAAAA&uuid=WN_GKWqbHkeSyuWetJmLFkj4g&_x_zm_rtaid=kR45-uuqRE-L65AxLjpbQw.1611967079119.2c054e3d3f8d8e63339273d9175939ed&_x_zm_rhtaid=866
NEW INFO 1 Live merger webinar with PLBY and MCAC on Friday January 29, 2021 at 12:00 NOON EST link below
https://mcacquisition.com/investor-relations/press-release-details/2021/Playboy-Enterprises-Inc.-and-Mountain-Crest-Acquisition-Corp-Participate-in-SPACInsider-ICR-Webinar-on-January-29th-at-12pm-ET/default.aspx
Playboy going public: Porn, Gambling, and Cannabis
!!!WARNING READING AHEAD!!! TL;DR at the end. It will take some time to sort through all the links and read/watch everything, but you should.
In the next couple weeks, Mountain Crest Acquisition Corp is taking Playboy public. The existing ticker MCAC will become PLBY. Special purpose acquisition companies have taken private companies public in recent months with great success. I believe this will be no exception. Notably, Playboy is profitable and has skyrocketing revenue going into a transformational growth phase.
Porn - First and foremost, let's talk about porn. I know what you guys are thinking. “Porno mags are dead. Why would I want to invest in something like that? I can get porn for free online.” Guess what? You are absolutely right. And that’s exactly why Playboy doesn’t do that anymore. That’s right, they eliminated their print division. And yet they somehow STILL make money from porn that people (see: boomers) pay for on their website through PlayboyTV, Playboy Plus, and iPlayboy. Here’s the thing: Playboy has international, multi-generational name recognition from porn. They have content available in 180 countries. It will be the only publicly traded adult entertainment (porn) company. But that is not where this company is going. It will help support them along the way. You can see every Playboy magazine through iPlayboy if you’re interested. NSFW links below:
https://www.playboy.com/
https://www.playboytv.com/
https://www.playboyplus.com/
https://www.iplayboy.com/
Gambling - Some of you might recognize the Playboy brand from gambling trips to places like Las Vegas, Atlantic City, Cancun, London or Macau. They’ve been in the gambling biz for decades through their casinos, clubs, and licensed gaming products. They see the writing on the wall. COVID is accelerating the transition to digital, application based GAMBLING. That’s right. What we are doing on Robinhood with risky options is gambling, and the only reason regulators might give a shit anymore is because we are making too much money. There may be some restrictions put in place, but gambling from your phone on your couch is not going anywhere. More and more states are allowing things like Draftkings, poker, state ‘lottery” apps, hell - even political betting. Michigan and Virginia just ok’d gambling apps. They won’t be the last. This is all from your couch and any 18 year old with a cracked iphone can access it. Wouldn’t it be cool if Playboy was going to do something like that? They’re already working on it. As per CEO Ben Kohn who we will get to later, “...the company’s casino-style digital gaming products with Scientific Games and Microgaming continue to see significant global growth.” Honestly, I stopped researching Scientific Games' sports betting segment when I saw the word ‘omni-channel’. That told me all I needed to know about it’s success.
“Our SG Sports™ platform is an enhanced, omni-channel solution for online, self-service and retail fixed odds sports betting – from soccer to tennis, basketball, football, baseball, hockey, motor sports, racing and more.”
https://www.scientificgames.com/
https://www.microgaming.co.uk/
“This latter segment has become increasingly enticing for Playboy, and it said last week that it is considering new tie-ups that could include gaming operators like PointsBet and 888Holdings.”
https://calvinayre.com/2020/10/05/business/playboys-gaming-ops-could-get-a-boost-from-spac-purchase/
As per their SEC filing:
“Significant consumer engagement and spend with Playboy-branded gaming properties around the world, including with leading partners such as Microgaming, Scientific Games, and Caesar’s Entertainment, steers our investment in digital gaming, sports betting and other digital offerings to further support our commercial strategy to expand consumer spend with minimal marginal cost, and gain consumer data to inform go-to-market plans across categories.”
https://www.sec.gov/Archives/edgadata/1803914/000110465921005986/tm2034213-12_defm14a.htm#tMDAA1
They are expanding into more areas of gaming/gambling, working with international players in the digital gaming/gambling arena, and a Playboy sportsbook is on the horizon.
https://www.playboy.com/read/the-pleasure-of-playing-with-yourself-mobile-gaming-in-the-covid-era
Cannabis - If you’ve ever read through a Playboy magazine, you know they’ve had a positive relationship with cannabis for many years. As of September 2020, Playboy has made a major shift into the cannabis space. Too good to be true you say? Check their website. Playboy currently sells a range of CBD products. This is a good sign. Federal hemp products, which these most likely are, can be mailed across state lines and most importantly for a company like Playboy, can operate through a traditional banking institution. CBD products are usually the first step towards the cannabis space for large companies. Playboy didn’t make these products themselves meaning they are working with a processor in the cannabis industry. Another good sign for future expansion. What else do they have for sale? Pipes, grinders, ashtrays, rolling trays, joint holders. Hmm. Ok. So it looks like they want to sell some shit. They probably don’t have an active interest in cannabis right? Think again:
https://www.forbes.com/sites/javierhasse/2020/09/24/playboy-gets-serious-about-cannabis-law-reform-advocacy-with-new-partnership-grants/?sh=62f044a65cea
“Taking yet another step into the cannabis space, Playboy will be announcing later on Thursday (September, 2020) that it is launching a cannabis law reform and advocacy campaign in partnership with National Organization for the Reform of Marijuana Laws (NORML), Last Prisoner Project, Marijuana Policy Project, the Veterans Cannabis Project, and the Eaze Momentum Program.”
“According to information procured exclusively, the three-pronged campaign will focus on calling for federal legalization. The program also includes the creation of a mentorship plan, through which the Playboy Foundation will support entrepreneurs from groups that are underrepresented in the industry.” Remember that CEO Kohn from earlier? He wrote this recently:
https://medium.com/naked-open-letters-from-playboy/congress-must-pass-the-more-act-c867c35239ae
Seems like he really wants weed to be legal? Hmm wonder why? The writing's on the wall my friends. Playboy wants into the cannabis industry, they are making steps towards this end, and we have favorable conditions for legislative progress.
Don’t think branding your own cannabis line is profitable or worthwhile? Tell me why these 41 celebrity millionaires and billionaires are dummies. I’ll wait.
https://www.celebstoner.com/news/celebstoner-news/2019/07/12/top-celebrity-cannabis-brands/
Confirmation: I hear you. “This all seems pretty speculative. It would be wildly profitable if they pull this shift off. But how do we really know?” Watch this whole video:
https://finance.yahoo.com/video/playboy-ceo-telling-story-female-154907068.html
Man - this interview just gets my juices flowing. And highlights one of my favorite reasons for this play. They have so many different business avenues from which a catalyst could appear. I think paying attention, holding shares, and options on these staggered announcements over the next year is the way I am going to go about it. "There's definitely been a shift to direct-to-consumer," he (Kohn) said. "About 50 percent of our revenue today is direct-to-consumer, and that will continue to grow going forward.” “Kohn touted Playboy's portfolio of both digital and consumer products, with casino-style gaming, in particular, serving a crucial role under the company's new business model. Playboy also has its sights on the emerging cannabis market, from CBD products to marijuana products geared toward sexual health and pleasure.” "If THC does become legal in the United States, we have developed certain strains to enhance your sex life that we will launch," Kohn said. https://cheddar.com/media/playboy-goes-public-health-gaming-lifestyle-focus Oh? The CEO actually said it? Ok then. “We have developed certain strains…” They’re already working with growers on strains and genetics? Ok. There are several legal cannabis markets for those products right now, international and stateside. I expect Playboy licensed hemp and THC pre-rolls by EOY. Something like this: https://www.etsy.com/listing/842996758/10-playboy-pre-roll-tubes-limited?ga_order=most_relevant&ga_search_type=all&ga_view_type=gallery&ga_search_query=pre+roll+playboy&ref=sr_gallery-1-2&organic_search_click=1 Maintaining cannabis operations can be costly and a regulatory headache. Playboy’s licensing strategy allows them to pick successful, established partners and sidestep traditional barriers to entry. You know what I like about these new markets? They’re expanding. Worldwide. And they are going to be a bigger deal than they already are with or without Playboy. Who thinks weed and gambling are going away? Too many people like that stuff. These are easy markets. And Playboy is early enough to carve out their spot in each. Fuck it, read this too: https://www.forbes.com/sites/jimosman/2020/10/20/playboy-could-be-the-king-of-spacs-here-are-three-picks/?sh=2e13dcaa3e05
Numbers: You want numbers? I got numbers. As per the company’s most recent SEC filing:
“For the year ended December 31, 2019, and the nine months ended September 30, 2020, Playboy’s historical consolidated revenue was $78.1 million and $101.3 million, respectively, historical consolidated net income (loss) was $(23.6) million and $(4.8) million, respectively, and Adjusted EBITDA was $13.1 million and $21.8 million, respectively.”
“In the nine months ended September 30, 2020, Playboy’s Licensing segment contributed $44.2 million in revenue and $31.1 million in net income.”
“In the ninth months ended September 30, 2020, Playboy’s Direct-to-Consumer segment contributed $40.2 million in revenue and net income of $0.1 million.”
“In the nine months ended September 30, 2020, Playboy’s Digital Subscriptions and Content segment contributed $15.4 million in revenue and net income of $7.4 million.”
They are profitable across all three of their current business segments.
“Playboy’s return to the public markets presents a transformed, streamlined and high-growth business. The Company has over $400 million in cash flows contracted through 2029, sexual wellness products available for sale online and in over 10,000 major retail stores in the US, and a growing variety of clothing and branded lifestyle and digital gaming products.”
https://www.sec.gov/Archives/edgadata/1803914/000110465921005986/tm2034213-12_defm14a.htm#tSHCF
Growth: Playboy has massive growth in China and massive growth potential in India. “In China, where Playboy has spent more than 25 years building its business, our licensees have an enormous footprint of nearly 2,500 brick and mortar stores and 1,000 ecommerce stores selling high quality, Playboy-branded men’s casual wear, shoes/footwear, sleepwear, swimwear, formal suits, leather & non-leather goods, sweaters, active wear, and accessories. We have achieved significant growth in China licensing revenues over the past several years in partnership with strong licensees and high-quality manufacturers, and we are planning for increased growth through updates to our men’s fashion lines and expansion into adjacent categories in men’s skincare and grooming, sexual wellness, and women’s fashion, a category where recent launches have been well received.” The men’s market in China is about the same size as the entire population of the United States and European Union combined. Playboy is a leading brand in this market. They are expanding into the women’s market too. Did you know CBD toothpaste is huge in China? China loves CBD products and has hemp fields that dwarf those in the US. If Playboy expands their CBD line China it will be huge. Did you know the gambling money in Macau absolutely puts Las Vegas to shame? Technically, it's illegal on the mainland, but in reality, there is a lot of gambling going on in China. https://www.forbes.com/sites/javierhasse/2020/10/19/magic-johnson-and-uncle-buds-cbd-brand-enter-china-via-tmall-partnership/?sh=271776ca411e “In India, Playboy today has a presence through select apparel licensees and hospitality establishments. Consumer research suggests significant growth opportunities in the territory with Playboy’s brand and categories of focus.” “Playboy Enterprises has announced the expansion of its global consumer products business into India as part of a partnership with Jay Jay Iconic Brands, a leading fashion and lifestyle Company in India.” “The Indian market today is dominated by consumers under the age of 35, who represent more than 65 percent of the country’s total population and are driving India’s significant online shopping growth. The Playboy brand’s core values of playfulness and exploration resonate strongly with the expressed desires of today’s younger millennial consumers. For us, Playboy was the perfect fit.” “The Playboy international portfolio has been flourishing for more than 25 years in several South Asian markets such as China and Japan. In particular, it has strategically targeted the millennial and gen-Z audiences across categories such as apparel, footwear, home textiles, eyewear and watches.” https://www.licenseglobal.com/industry-news/playboy-expands-global-footprint-india It looks like they gave COVID the heisman in terms of net damage sustained: “Although Playboy has not suffered any material adverse consequences to date from the COVID-19 pandemic, the business has been impacted both negatively and positively. The remote working and stay-at-home orders resulted in the closure of the London Playboy Club and retail stores of Playboy’s licensees, decreasing licensing revenues in the second quarter, as well as causing supply chain disruption and less efficient product development thereby slowing the launch of new products. However, these negative impacts were offset by an increase in Yandy’s direct-to-consumer sales, which have benefited in part from overall increases in online retail sales so far during the pandemic.” Looks like the positives are long term (Yandy acquisition) and the negatives are temporary (stay-at-home orders).
https://www.sec.gov/Archives/edgadata/1803914/000110465921006093/tm213766-1_defa14a.htm
This speaks to their ability to maintain a financially solvent company throughout the transition phase to the aforementioned areas. They’d say some fancy shit like “expanded business model to encompass four key revenue streams: Sexual Wellness, Style & Apparel, Gaming & Lifestyle, and Beauty & Grooming.” I hear “we’re just biding our time with these trinkets until those dollar dollar bill y’all markets are fully up and running.” But the truth is these existing revenue streams are profitable, scalable, and rapidly expanding Playboy’s e-commerce segment around the world.
"Even in the face of COVID this year, we've been able to grow EBITDA over 100 percent and revenue over 68 percent, and I expect that to accelerate going into 2021," he said. “Playboy is accelerating its growth in company-owned and branded consumer products in attractive and expanding markets in which it has a proven history of brand affinity and consumer spend.”
Also in the SEC filing, the Time Frame:
“As we detailed in the definitive proxy statement, the SPAC stockholder meeting to vote on the transaction has been set for February 9th, and, subject to stockholder approval and satisfaction of the other closing conditions, we expect to complete the merger and begin trading on NASDAQ under ticker PLBY shortly thereafter,” concluded Kohn.
The Players: Suhail “The Whale” Rizvi (HMFIC), Ben “The Bridge” Kohn (CEO), “lil” Suying Liu & “Big” Dong Liu (Young-gun China gang). I encourage you to look these folks up. The real OG here is Suhail Rizvi. He’s from India originally and Chairman of the Board for the new PLBY company. He was an early investor in Twitter, Square, Facebook and others. His firm, Rizvi Traverse, currently invests in Instacart, Pinterest, Snapchat, Playboy, and SpaceX. Maybe you’ve heard of them. “Rizvi, who owns a sprawling three-home compound in Greenwich, Connecticut, and a 1.65-acre estate in Palm Beach, Florida, near Bill Gates and Michael Bloomberg, moved to Iowa Falls when he was five. His father was a professor of psychology at Iowa. Along with his older brother Ashraf, a hedge fund manager, Rizvi graduated from Wharton business school.” “Suhail Rizvi: the 47-year-old 'unsocial' social media baron: When Twitter goes public in the coming weeks (2013), one of the biggest winners will be a 47-year-old financier who guards his secrecy so zealously that he employs a person to take down his Wikipedia entry and scrub his photos from the internet. In IPO, Twitter seeks to be 'anti-FB'” “Prince Alwaleed bin Talal of Saudi Arabia looks like a big Twitter winner. So do the moneyed clients of Jamie Dimon. But as you’ve-got-to-be-joking wealth washed over Twitter on Thursday — a company that didn’t exist eight years ago was worth $31.7 billion after its first day on the stock market — the non-boldface name of the moment is Suhail R. Rizvi. Mr. Rizvi, 47, runs a private investment company that is the largest outside investor in Twitter with a 15.6 percent stake worth $3.8 billion at the end of trading on Thursday (November, 2013). Using a web of connections in the tech industry and in finance, as well as a hearty dose of good timing, he brought many prominent names in at the ground floor, including the Saudi prince and some of JPMorgan’s wealthiest clients.” https://www.nytimes.com/2013/11/08/technology/at-twitter-working-behind-the-scenes-toward-a-billion-dollar-payday.html Y’all like that Arab money? How about a dude that can call up Saudi Princes and convince them to spend? Funniest shit about I read about him: “Rizvi was able to buy only $100 million in Facebook shortly before its IPO, thus limiting his returns, according to people with knowledge of the matter.” Poor guy :(
He should be fine with the 16 million PLBY shares he's going to have though :)
Shuhail also has experience in the entertainment industry. He’s invested in companies like SESAC, ICM, and Summit Entertainment. He’s got Hollywood connections to blast this stuff post-merger. And he’s at least partially responsible for that whole Twilight thing. I’m team Edward btw.
I really like what Suhail has done so far. He’s lurked in the shadows while Kohn is consolidating the company, trimming the fat, making Playboy profitable, and aiming the ship at modern growing markets.
https://www.reuters.com/article/us-twitter-ipo-rizvi-insight/insight-little-known-hollywood-investor-poised-to-score-with-twitter-ipo-idUSBRE9920VW20131003
Ben “The Bridge” Kohn is an interesting guy. He’s the connection between Rizvi Traverse and Playboy. He’s both CEO of Playboy and was previously Managing Partner at Rizvi Traverse. Ben seems to be the voice of the Playboy-Rizvi partnership, which makes sense with Suhail’s privacy concerns. Kohn said this:
“Today is a very big day for all of us at Playboy and for all our partners globally. I stepped into the CEO role at Playboy in 2017 because I saw the biggest opportunity of my career. Playboy is a brand and platform that could not be replicated today. It has massive global reach, with more than $3B of global consumer spend and products sold in over 180 countries. Our mission – to create a culture where all people can pursue pleasure – is rooted in our 67-year history and creates a clear focus for our business and role we play in people’s lives, providing them with the products, services and experiences that create a lifestyle of pleasure. We are taking this step into the public markets because the committed capital will enable us to accelerate our product development and go-to-market strategies and to more rapidly build our direct to consumer capabilities,” said Ben Kohn, CEO of Playboy.
“Playboy today is a highly profitable commerce business with a total addressable market projected in the trillions of dollars,” Mr. Kohn continued, “We are actively selling into the Sexual Wellness consumer category, projected to be approximately $400 billion in size by 2024, where our recently launched intimacy products have rolled out to more than 10,000 stores at major US retailers in the United States. Combined with our owned & operated ecommerce Sexual Wellness initiatives, the category will contribute more than 40% of our revenue this year. In our Apparel and Beauty categories, our collaborations with high-end fashion brands including Missguided and PacSun are projected to achieve over $50M in retail sales across the US and UK this year, our leading men’s apparel lines in China expanded to nearly 2500 brick and mortar stores and almost 1000 digital stores, and our new men’s and women’s fragrance line recently launched in Europe. In Gaming, our casino-style digital gaming products with Scientific Games and Microgaming continue to see significant global growth. Our product strategy is informed by years of consumer data as we actively expand from a purely licensing model into owning and operating key high-growth product lines focused on driving profitability and consumer lifetime value. We are thrilled about the future of Playboy. Our foundation has been set to drive further growth and margin, and with the committed capital from this transaction and our more than $180M in NOLs, we will take advantage of the opportunity in front of us, building to our goal of $100M of adjusted EBITDA in 2025.”
https://www.businesswire.com/news/home/20201001005404/en/Playboy-to-Become-a-Public-Company
Also, according to their Form 4s, “Big” Dong Liu and “lil” Suying Liu just loaded up with shares last week. These guys are brothers and seem like the Chinese market connection. They are only 32 & 35 years old. I don’t even know what that means, but it's provocative.
https://www.secform4.com/insider-trading/1832415.htm
https://finance.yahoo.com/news/mountain-crest-acquisition-corp-ii-002600994.html
Y’all like that China money?
“Mr. Liu has been the Chief Financial Officer of Dongguan Zhishang Photoelectric Technology Co., Ltd., a regional designer, manufacturer and distributor of LED lights serving commercial customers throughout Southern China since November 2016, at which time he led a syndicate of investments into the firm. Mr. Liu has since overseen the financials of Dongguan Zhishang as well as provided strategic guidance to its board of directors, advising on operational efficiency and cash flow performance. From March 2010 to October 2016, Mr. Liu was the Head of Finance at Feidiao Electrical Group Co., Ltd., a leading Chinese manufacturer of electrical outlets headquartered in Shanghai and with businesses in the greater China region as well as Europe.”
Dr. Suying Liu, Chairman and Chief Executive Officer of Mountain Crest Acquisition Corp., commented, “Playboy is a unique and compelling investment opportunity, with one of the world’s largest and most recognized brands, its proven consumer affinity and spend, and its enormous future growth potential in its four product segments and new and existing geographic regions. I am thrilled to be partnering with Ben and his exceptional team to bring his vision to fruition.”
https://www.businesswire.com/news/home/20201001005404/en/Playboy-to-Become-a-Public-Company
These guys are good. They have a proven track record of success across multiple industries. Connections and money run deep with all of these guys. I don’t think they’re in the game to lose.
I was going to write a couple more paragraphs about why you should have a look at this but really the best thing you can do is read this SEC filing from a couple days ago. It explains the situation in far better detail. Specifically, look to page 137 and read through their strategy. Also, look at their ownership percentages and compensation plans including the stock options and their prices. The financials look great, revenue is up 90% Q3, and it looks like a bright future.
https://www.sec.gov/Archives/edgadata/1803914/000110465921005986/tm2034213-12_defm14a.htm#tSHCF
I’m hesitant to attach this because his position seems short term, but I’m going to with a warning because he does hit on some good points (two are below his link) and he’s got a sizable position in this thing (500k+ on margin, I think). I don’t know this guy but he did look at the same publicly available info and make roughly the same prediction, albeit without the in depth gambling or cannabis mention. You can also search reddit for ‘MCAC’ and very few relevant results come up and none of them even come close to really looking at this thing.
https://docs.google.com/document/d/1gOvAd6lebs452hFlWWbxVjQ3VMsjGBkbJeXRwDwIJfM/edit?usp=sharing
“Also, before you people start making claims that Playboy is a “boomer” company, STOP RIGHT THERE. This is not a good argument. Simply put. The only thing that matters is Playboy’s name recognition, not their archaic business model which doesn’t even exist anymore as they have completely repurposed their business.”
“Imagine not buying $MCAC at a 400M valuation lol. Streetwear department is worth 1B alone imo.”
Considering the ridiculous Chinese growth as a lifestyle brand, he’s not wrong.
Current Cultural Significance and Meme Value: A year ago I wouldn’t have included this section but the events from the last several weeks (even going back to tsla) have proven that a company’s ability to meme and/or gain social network popularity can have an effect. Tik-tok, Snapchat, Twitch, Reddit, Youtube, Facebook, Twitter. They all have Playboy stuff on them. Kids in middle and highschool know what Playboy is but will likely never see or touch one of the magazines in person. They’ll have a Playboy hoodie though. Crazy huh? A lot like GME, PLBY would hugely benefit from meme-value stock interest to drive engagement towards their new business model while also building strategic coffers. This interest may not directly and/or significantly move the stock price but can generate significant interest from larger players who will.
Bull Case: The year is 2025. Playboy is now the world leader pleasure brand. They began by offering Playboy licensed gaming products, including gambling products, direct to consumers through existing names. By 2022, demand has skyrocketed and Playboy has designed and released their own gambling platforms. In 2025, they are also a leading cannabis brand in the United States and Canada with proprietary strains and products geared towards sexual wellness. Cannabis was legalized in the US in 2023 when President Biden got glaucoma but had success with cannabis treatment. He personally pushes for cannabis legalization as he steps out of office after his first term. Playboy has also grown their brand in China and India to multi-billion per year markets. The stock goes up from 11ish to 100ish and everyone makes big gains buying somewhere along the way.
Bear Case: The United States does a complete 180 on marijuana and gambling. President Biden overdoses on marijuana in the Lincoln bedroom when his FDs go tits up and he loses a ton of money in his sports book app after the Fighting Blue Hens narrowly lose the National Championship to Bama. Playboy is unable to expand their cannabis and gambling brands but still does well with their worldwide lifestyle brand. They gain and lose some interest in China and India but the markets are too large to ignore them completely. The stock goes up from 11ish to 13ish and everyone makes 15-20% gains.
TL;DR: Successful technology/e-commerce investment firm took over Playboy to turn it into a porn, online gambling/gaming, sports book, cannabis company, worldwide lifestyle brand that promotes sexual wellness, vetern access, women-ownership, minority-ownership, and “pleasure for all”. Does a successful online team reinventing an antiquated physical copy giant sound familiar? No options yet, shares only for now. $11.38 per share at time of writing. My guess? $20 by the end of February. $50 by EOY. This is not financial advice. I am not qualified to give financial advice. I’m just sayin’ I would personally use a Playboy sports book app while smoking a Playboy strain specific joint and it would be cool if they did that. Do your own research. You’d probably want to start here:
WARNING - POTENTIALLY NSFW - SEXY MODELS AHEAD - no actual nudity though
https://s26.q4cdn.com/895475556/files/doc_presentations/Playboy-Craig-Hallum-Conference-Investor-Presentation-11_17_20-compressed.pdf
Or here:
https://www.mcacquisition.com/investor-relations/default.aspx
Jimmy Chill: “Get into any SPAC at $10 or $11 and you are going to make money.”
STL;DR: Buy MCAC. MCAC > PLBY couple weeks. Rocketship. Moon.
Position: 5000 shares. I will buy short, medium, and long-dated calls once available.