Endeavour Group Holdings (NYSE: EDR) made its public debut in late April. The company opened at $27, more than 10% above its pre-IPO price of $24, valuing the company at $7.6 billion. Since then, the stock is up another 10% despite a tough trading environment for IPOs.
The company had previously filed for an IPO in 2019, but the offering was pulled at the last moments due to inadequate demand. This time, the reception was much different as pricing was steadily hiked due to strong demand from $21 to $27 during the pre-IPO process. The company ultimately sold about 21.3 million shares and plans to use the proceedings to pay off debt and make more investments in its business.
Company Profile
Endeavour is a holding company with several media and entertainment agencies. It was formed by a merger in 2009 between William Morris Agency and the Endeavor Agency. The company represents artists, actors, athletes, and publishing and also represents the NFL and NBA. In 2016, it purchased a controlling stake in the UFC and bought full control earlier this year.
The merger was spearheaded by Ari Emmanuel who is now the CEO and has a controlling interest. He is known as the inspiration for the "Ari Gold" character in the show Entourage as well as being the brother of former Chicago Mayor and Chief of Staff Rahm Emanuel and the Dr. Zeke Emanuel who was President Obama's healthcare czar.
There are many who are skeptical of the Endeavour IPO given its complicated financials, ownership, and entanglements with foreign governments. Tesla (Nasdaq: TSLA) CEO Elon Musk is on Endeavour's Board who tends to be a magnet for controversy. Another issue is that the pandemic has affected its live sports and entertainment divisions which led to weakness in 2020 financials. Endeavour's net loss was $625 million in 2020, while revenue declined to $3.5 billion from $4.6 billion.
Stock Price Outlook
Endeavour Group is a tough stock to figure out. It's easy to see it being a retail favorite, since it owns the UFC and has Tesla on its Board. Further, the UFC's value could have significant upside given that its still growing in popularity and remains a fraction of the value of other pro sports leagues.
Additionally, Endeavour Group could also be seen as a reopening play since its entertainment and sports businesses will see substantial growth, once the economy returns to normal and we see concerts and live sports with full audiences resume.