Please ensure Javascript is enabled for purposes of website accessibility

Why PLBY Group Fell 15% in the First Hour Today

By Reuben Gregg Brewer - Apr 7, 2021 at 11:47AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

After a big gain the day before, investors took some profits despite an upbeat outlook provided by Wall Street.

What happened

Shares of PLBY Group (PLBY 9.92%), which describes itself as a pleasure and leisure company, fell as much as 15% in early trading today. The stock pared that loss to 11% by 10:30 a.m. EDT or so. There are conflicting trends here.

So what

On April 6, PLBY Group announced that it was inking a partnership with Nifty Gateway, which operates a non-fungible token (NFT) exchange. The general idea is to use PLBY's historical content from Playboy magazine to create content in conjunction with outside artists that can then be sold as NFTs. The NFT space has been a pretty hot area of late, so investors were quick to bid up the stock on the news. Thus today's pullback isn't shocking given the previous day's gains. It's not unusual for investors to take profits after a large price spike.  

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

Image source: Getty Images.

That said, Roth Capital increased PLBY Group's price target today, citing the move into the NFT space. While maintaining a buy rating on the stock, the analyst took the price target from $26 per share to $35. Including today's pullback, the stock is trading around $26, suggesting a roughly 33% upside in the stock. Investors often bid a company's stock price up on price target upgrades, but in this situation there were other issues for investors to digest, and the analyst move didn't have the impact that one might normally expect.  

Now what

PLBY Group has been public only since early February, following a blank check IPO. The stock, including today's drop, is up over 90% in roughly two months. The NFT move is an interesting one for a company with legacy print content that has been trying to adjust to a digital world, which is encouraging. However, given the special purpose acquisition corporation (SPAC) excitement that's been driving the share prices of blank check IPOs like this one, it might be best for long-term investors to watch PLBY Group for a little while longer before stepping aboard. Indeed, it hasn't even reported its first full quarter as a public company yet (which won't actually happen until it reports second-quarter results, given the mid-first-quarter timing of its IPO). 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Playboy Enterprises, Inc. Stock Quote
Playboy Enterprises, Inc.
PLBY
$9.53 (9.92%) $0.86

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
338%
 
S&P 500 Returns
119%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/17/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.