Investors interested in opportunities in the growth of the sports industry have a number of different options to implement an investment strategy with that target.
One common path is to invest in sports accessories through stocks like Nike Inc (NYSE:NKE) or Under Armour Inc (NYSE:UAA). Other themes in the space include derivative or direct entertainment providers like Verizon Communications Inc. (NYSE:VZ), TAKE-TWO INTERACTIVE SOFTWARE, INC (NASDAQ:TTWO), or Draftkings Inc (NASDAQ:DKNG).
But the landscape in the industry suggests there may be a more interesting opportunity.
The NFL is seeing declining interest. Major League Baseball ratings have been falling for 35 years. NBA ratings have been falling steadily since 1996, and are now just 38% of the total from 25 years ago.
But there’s one major sport that is growing in popularity and fan enthusiasm in robust terms: Mixed Martial Arts. Note, we aren’t including World Wrestling Entertainment, Inc. (NYSE:WWE) as part of this space.
In fact, there are direct ways to invest in this growth theme, and we take a look at several below, along with their recent catalysts.
Endeavor Group holdings Inc (NYSE:EDR) is the most notable name in the space as the owner of the UFC, which is clearly the “major leagues” for mixed martial arts.
The firm operates through the Owned Sports Properties; Events, Experiences & Rights; and Representation segments. The Owned Sports Properties segment is comprised of a unique portfolio of scarce sports properties, including UFC, PBR and Euroleague, that generate significant growth through innovative rights deals and exclusive live events. The Events, Experiences & Rights segment owns and operates many events, including the Miami Open, HSBC Champions, Frieze Art Fair, New York Fashion Week, and Hyde Park Winter Wonderland. The Representation segment provides services to talent and corporate clients and includes content division, Endeavor Content.
Endeavor Group holdings Inc (NYSE:EDR) recently released its financial results for the quarterly period ended June 30, 2021, which included news that revenue increased to $1.1 billion, up approximately $650 million compared with Q2 of 2020, Q2 marked by a return of live events and audiences, as well as an increase in both productions and content deliveries, UFC’s Q2 performance – including three sold-out, arena record Pay-Per-View events – led to biggest first half in UFC history, and the company completed a $600 million repayment of outstanding debt in advance of its Q3 target.
“Despite continued challenges brought on by the pandemic, our company once again demonstrated resilience, due in large part to our global portfolio of premium assets and the creativity of our employees and partners,” remarked Ariel Emanuel, CEO, Endeavor. “As you look at the secular trends defining our industries – marked by the growing demand for content, the increased value of the talent and brands behind that content, and the desire of people to come together around live events and experiences – Endeavor remains firmly and uniquely positioned for a strong second half of 2021.”
If you’re long this stock, then you’re liking how the stock has responded to the announcement. EDR shares have been moving higher over the past week overall, pushing about 5% to the upside on above average trading volume. Shares of the stock have powered higher over the past month, rallying roughly 12% in that time on strong overall action.
Endeavor Group holdings Inc (NYSE:EDR) managed to rope in revenues totaling $1.1B in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of -6.6%, as compared to year-ago data in comparable terms.
B2Digital, Inc. (OTC US:BTDG) has successfully branded itself as the “development league for mixed martial arts.” This is a speculative name, but it’s also quite interesting given its recent explosive growth curve. The company recently noted that its September quarter is now conservatively on track for $673k topline, which would represent 18.3% sequential quarterly growth and 395% growth on a year-over-year basis, and would represent a new record for the Company.
BTDG’s market cap is under $6 million, yet it’s on pace to draw in almost $5 million on the topline with strong margins over the next 4 quarters if you assume a continued 18-20% sequential quarterly growth rate. The key point is that companies growing at that pace generally price at somewhere around 15x-20x forward sales. BTDG is pricing at just over 1x forward sales. In other words, if this company’s growth this year isn’t a head fake, then shares of the stock could be very cheap at present levels.
B2Digital, Inc. (OTC US:BTDG) most recently announced that its live event segment, the B2 Fighting Series, will return to the Sloan Convention Center in Bowling Green, Kentucky this Saturday night for “another supercharged night of pulse-pounding MMA action at B2FS 134.” According to the company’s release, VIP tickets for the event have already sold out. General Admission tickets have nearly sold out, but there will be limited availability for tickets at the door. Interested fans will also be able to stream it live on Pay-Per-View here, or enjoy it live over the B2 Fighting Series apps on Amazon Fire TV or Apple TV.
Brandon ‘Hardrock’ Higdon, B2’s Matchmaker, commented, “This is going to be lights out action from start to finish, with 17 fascinating amateur and pro matchups in play, including a total of four title bouts. The Main Event should be a classic, featuring the pro flyweight title fight between top Canadian prospect and current champ, James “The Suplex Kid” Clarke, and former champ Donnie “The Real Deal” Ballou. This is a must-see night for true MMA fans.”
The release also notes that the B2FS 134 undercard will feature 3 amateur title fights, including the return of local favorite Bryant Haynes (6-1-0), as he defends his featherweight belt against #1 contender Will Baker (3-0-0). Also on the card, Davion Trotter (6-1-0) will take on Russian powerhouse Zlatko Skulian (6-1-0) for the vacant lightweight title, and Willian Conner Jr squares off with Payton Hughes for the vacant middleweight title.
B2Digital, Inc. (OTC US:BTDG) CEO Greg Bell noted, “We took our normal 2 week break for back to school time but now it’s time to get the B2FS engine fired back up, and Bowling Green is a great place to do that. It seems like every time we come back to Sloan, we see something amazing. From a big picture perspective, 2021 has been a truly transformative year of growth through three quarters. But all indications suggest the best is yet to come. And the action begins again in the B2FS Cage on Saturday night!”
Xtreme Fighting Championships Inc (OTC US:DKMR) is an early stage development company, which entered into an investment into the sports entertainment market of mixed martial arts.
The company was founded on May 3, 2006 and is headquartered in Miramar Beach, FL.
Xtreme Fighting Championships Inc (OTC US:DKMR) recently announced that it hosted XFC 45 and YoungGuns 3 on Friday, Aug. 6 at a packed DeltaPlex Arena in Grand Rapids, MI, LIVE on FOX Sports 2, XFCTV.com and around the world on the XFC’s many global broadcast partners. It noted that the highly anticipated back-to-back events were the most successful in company history, recording the highest gate total and FOX viewership numbers since XFC’s historic relaunch.
XFC President Myron Molotky: “Every single fighter dug deep to put on an unforgettable show for XFC fans around the world. The XFC is raising the bar every time the Hexagon door locks, and we’re going to break some news soon that fans are going to really go crazy about.”
The context for this announcement is a bit of a bid, with shares acting well over the past five days, up about 153% in that timeframe. Over the past month, shares of the stock have suffered from clear selling pressure, dropping by roughly -54%.
Xtreme Fighting Championships Inc (OTC US:DKMR) had no reported sales in its last quarterly financial data. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($1 against $344K, respectively).
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