There aren't too many publicly traded companies that share their ticker symbols with their founder's first name, and as of last week, there's one less. Callaway Golf -- founded by Ely Callaway in 1982 and hitting the market under the ticker symbol ELY a decade later -- officially changed its name and ticker symbol on Wednesday of last week.
It was the mother of all vanity plates, but the company has now been rebranded as Topgolf Callaway Brands (MODG 0.06%). Why did it happen? What's the point of the new ticker symbol? What are the implications for you as a former Callaway Golf shareholder? I'll cover all of that, but for now it's tee time. Let's try to steer you clear of landing in the rough.
Image source: Topgolf Callaway Brands.
Fore score
Let's tackle the last question first, as it may have been surprising to see Topgolf Callaway Brands with the new ticker symbol pop up on your brokerage account last week. Was it a spinoff? No. This is the same Callaway Golf stake you owned before. Was it a taxable event? No. You continue to own it at the same cost basis and the initial time of purchase as before.
The new name may be a mouthful, but it makes sense when you weigh its acquisition of Topgolf. Callaway announced that it would be buying Topgolf in late 2020, and the transaction closed in early 2021. Topgolf is a growing chain of high-end driving ranges. With table service to your bay for food and drinks, colorful targets, and high-tech scoring, Topgolf has injected a social element to the sport that's driving younger audiences to the game.
Topgolf Callaway Brands has gone shopping before. It acquired TravisMathew and Jack Wolfskin in separate deals to beef up its golf apparel and footwear games. Ogio gave it some skin in the backpack and golf bag game. The company has become about more than just its signature drivers and putters, but with Topgolf now both a major growth driver as well as a brand ambassador it's not a surprise to see it get top billing in the new corporate moniker.
Topgolf accounted for 35% of the company's revenue last year. It's the reason why revenue soared 97% last year, even though organic growth itself was up a respectable 29%. Golf equipment accounted for just 39% of the revenue mix last year. The balance of the revenue mix outside of Topgolf and golf equipment is the active lifestyle category that includes apparel, gear, and other merchandise that appeals to more than just the golfing community.
This brings me to the new ticker symbol. Callaway Golf traded under ELY for three decades, and founder Ely Callaway passed away 21 years ago. It could've kept going under the old ticker symbol as a tribute, but the company is a far different entity than when Callaway ran the show. It was time for a clean break.
"The name change reflects the company's dynamic brand portfolio that has unmatched scale and reach across the full Modern Golf and active lifestyle ecosystem, including on- and off-course golf," is the official explanation in last month's press release explaining the move. Modern Golf? MODG? It makes sense now, even if it doesn't exactly roll off the tongue.
Golf may be an old sport, but Topgolf Callaway Brands is a modern company with a high-tech bent. Swing away at Topgolf, and the ball you're hitting has tracking technology to let you know how far it traveled and where it landed. That proprietary Toptracer technology is pretty game changing, and the company is willing to share -- for a price. It's the leading ball-tracking software provider to third-party driving ranges. A modern take on a classic sport is worthy of a new corporate moniker and ticker symbol. It's how you play to win the game when you're more than just a throwback sporting goods stock.
