What happened

Shares of PLBY Group (NASDAQ:PLBY), which describes itself as a pleasure and leisure company but is probably best known as the owner of the Playboy magazine and related assets, rose a dramatic 26% at one point during early trading on April 12. By roughly 1 p.m. EDT, however, the stock had given much of that advance back, sitting with a gain of around 13%. The big news was that Wall Street research firm Hedgeye made a positive call on the stock.

So what

The company was taken private many years ago. However, in February it was brought back into the public sphere via a blank check company (also known as a special purpose acquisition company) in February. Since then, the company has announced the acquisition of an omni-channel retailer and inked a deal with Nifty Gateway. The latter agreement, which allows PLBY Group to enter the nonfungible token (NFT) space with its older content, led to a big run up in the share price.    

The word Growth spelled out with blocks aligned on an upward sloping line.

Image source: Getty Images.

The key takeaway from both moves, though, is that PLBY Group is moving quickly and creatively as it reenters the public sphere. Today's big jump, however, wasn't related to PLBY Group's news flow, but to that of research firm Hedgeye, which named PLBY Group a "best new idea." Although noting that the company is relatively small today, limiting the ability of large investors to get involved, Hedgeye believes it could grow to be a $10 billion firm. Its current market cap is a touch under $1 billion, suggesting that there is notable upside if Hedgeye is correct in its assessment.   

Now what

Investors tend to like positive Wall Street research calls, so it's not surprising that PLBY Group's stock was on the rise today. However, there's a great distance between $1 billion and $10 billion, and a lot will have to go right for the company to traverse the climb. That probably helps explain the pullback from the peak today. That's not to suggest that PLBY can't become a so-called "10-bagger," but that the initial excitement is probably pricing in more good news than is really apparent right now. Notably, the stock has yet to report a full quarter's earnings as a public company (which won't happen until the second quarter of 2021 due to the February initial public offering date). Long-term investors should take the Hedgeye news with a grain of salt.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.