Share of PLBY Group (PLBY -1.88%), a self-described "pleasure and leisure" company, fell as much as 13% in early trading on Monday. That follows material losses the previous trading day. The stock is now down by around 20% from its most recent peak. Although this could be mere market noise, there are some other things to consider here.
Over the past month, PLBY Group's stock has risen by about 100%. That said, the shares were higher by as much as 150% not too long ago. So there's probably a bit of profit taking going on, given the rapid ascent over such a short period. That said, even after the recent pullback, PLBY Group is still higher by roughly 160% since its early February IPO. Which brings us to the story that's more interesting -- and perhaps more relevant.
PLBY Group was brought public via a blank check company, also known as a special purpose acquisition company (SPAC). The SPAC space has been pretty hot lately, with newly public companies often rallying strongly after they start trading. That's clearly been the case with PLBY Group, which also managed to get in on the market excitement around non-fungible tokens (NFTs) with a recent agreement.
Adding to the story was last week's analyst call that named PLBY Group a "best new idea" and cited massive long-term growth potential.
But trees don't grow to the sky and, at some point, investors start to take profits. That's very likely what has been going on the last couple of days, noting that SPACs have come under increasing regulatory scrutiny of late and the NFT area has cooled some since headline-grabbing auction news early this year.
Investors should probably tread with caution here. There's a lot of excitement about the future, which has lifted the stock very far in a very short time. But there's not a lot of information to work with when it comes to financial results.
In fact, PLBY Group won't actually report a full quarter of financial results as a public entity until its second-quarter earnings because of its IPO date in the middle of the first quarter. Until there are some more numbers to work with, the story here, exciting as it may be, just doesn't have much meat to it.