Sometimes private matters should remain out of the public eye. two mens lifestyle companies have nevertheless decided to go public via special purpose acquisition companies (spac).
Playboy, the adult magazine publisher turned lifestyle brand, signalled its return to the stock market nine years after late founder hugh hefner took it private. the company is to go public at a $413m enterprise value by merging with mountain crest acquisition, a blank-cheque company. hims, a start-up that sells erectile dysfunction and hair loss treatments online, will list its shares through a reverse merger with oaktree acquisition, which values the three-year old business at $1.6bn, including debt. neither offer compelling investment cases.
Hims got its start selling potentially embarrassing products stigma-free for millennial men online. it launched a website for women, hers, in 2018. the problem is that both sites offer products that are readily available elsewhere either online or at brick and mortar pharmacies. capsule, amazon-owned pillpack, and nowrx all compete in the crowded online pharmacy and delivery space.
Like many other direct-to-consumer start-ups hims spends aggressively on marketing. while revenue more than tripled to $83m in 2019, it spent $52m of that on marketing although that figure is coming down. while it earned a gross profit, costs wore away any operating profits so that ebitda was negative.
A more mature playboy knows something about cut-throat online competition, following intense rivalry from free adult sites. it ceased publishing its signature magazine this year, and now focuses on four categories; sexual wellness (condoms and lingeries); style and apparel (its bunny logo apparel is popular in china); gaming and lifestyle; and beauty and grooming.still, net income fell from $1.7m in 2018 to just $265,000 in 2019 on $94.2m of revenue.
Ultimately profits may not matter much. so far this year, 115 spacs have raised $41.7bn in initial public offerings on us exchanges, according to refinitiv, far above the recent annual trend. privately hims and playboy might have remained interesting secrets. in public, they could well embarrass an investor.
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