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Why PLBY Group Stock Rocketed 16% at the Open Today

By Reuben Gregg Brewer - Mar 24, 2021 at 11:36AM

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Shares of the newly public (again) company rallied after its first earnings report.

What happened

Shares of "pleasure and leisure" company PLBY Group (PLBY -4.13%), which is the parent company of the iconic Playboy brand, rose 16% in early trading on Wednesday. The big news driving that move actually came out after the close on Tuesday, when the company reported earnings.  

So what

PLBY Group IPOed via a blank check company in early February, so it hasn't been a public company for very long. But its first earnings release did contain some upbeat news. Revenues rose by nearly 90% year over year in 2020's fourth quarter. The company's loss narrowed by $5.5 million, to a loss of $500,000.

There are always a lot of moving parts in a company's first report after going public. And because the company wasn't public during the quarter being reviewed, there are no per-share numbers to see. However, this report will provide something of a baseline for future comparisons, and, overall, it looks like investors were pleased.

That said, the sharp gain at the open didn't entirely hold. The stock was still up by about 9% at around 11 a.m. EDT, but had lost a chunk of its early-session pop.  

Two people looking at a computer with a stock graph on the screen .

Image source: Getty Images.

Although PLBY Group is still in its early days as a public enterprise, it has already inked an acquisition deal. In the release, the company noted that the IPO left it with roughly $100 million in unrestricted cash on its balance sheet. It put $25 million to work on March 1 when it bought omnichannel retailer Lovers. The company described the deal as accretive, so it should quickly start adding to PLBY Group's financial results. It's easy to argue that this is another positive development.  

Now what

PLBY Group is the reincarnation of Playboy, which was taken private by its founder, Hugh Hefner, a decade ago. The company, once primarily a magazine publisher, is trying to reposition for the digital age as a "pleasure and leisure" company, which is a fairly vague description. Most long-term investors would probably be best off to stay on the sidelines here until PLBY Group has a little more history to examine, particularly given that transitioning from a print-centric media company to a digital-centric one is far from easy to manage.

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