One very interesting stock that really burst onto the radar this week in the OTC space is B2Digital Inc. (OTCMKTS:BTDG).
The company is basically the number one farm league in the MMA space. You are familiar with pay-per-view events like the Ultimate Fighting Championship. You know Joe Rogan doing high-level analysis of some tap-out hold or one-punch annihilation. But, like any other sport, those star fighters had to start somewhere. It takes years of practice, theory, diet, training, and work-out regimens to become an octagon hero.
BTDG is where they come from. The company does its own fighting events, tournaments, training facilities, supplements, resources, etc. It caters to hardcore fans and future stars in MMA in a manner that perhaps no other company on the planet can truly claim.
In recent days, the stock has taken flight as the market gets more information about how BTDG is dealing with current headwinds and investing at a strong ROI for the next chapter in its evolution as a leader in the cultural revolution known as “Mixed Martial Arts”.
The Big Point
The big point right now for a company in the MMA space – or any live sports niche – is how this Covid mess is going to work out over the long term. For live sports and fitness companies, the coronavirus has been deadly. But this isn’t a straight-up economic disaster.
As the company points out in its recent shareholder letter release, this is both crisis and opportunity, depending on which side of the equation you are situated. This is a transfer of assets. If you have shallow pockets or high leverage, a run of a series of consecutive months with basically no revenues can’t be survived, and assets must be shed. And given that few in affected industries will be in much better shape, those assets end up dumped onto the market at firesale prices.
But for those who can pass through this doorway into the world beyond the vaccine – beyond the coronavirus – those assets suddenly become full-price value again.
It’s not fair. But nothing is, in love and war… and business. And it matters a whole heck of a lot in the MMA world because the long-term growth thesis is extraordinary.
Where to Next?
The UFC is the current pinnacle of the MMA world. At the forefront, the UFC was purchased in 2002 for $2m and later sold in 2016 for over $4bn, amounting to one of the highest value deals ever in sports. In 2018, UFC alone generated $700m in revenue and accumulated a worth of $7bn after acquiring a gregarious $1.5bn TV contract with ESPN.
As noted in the BTDG release, “Our vision remains intact. The MMA revolution is a sticky, long-term growth thesis that isn’t going anywhere, and B2Digital has positioned itself as the #1 development foundation for hardcore fans and top fighters destined for eventual superstardom. We look forward to resuming our core trend of doubling our live event and social media audience consistently on a monthly basis.”
All of these themes were even more poignantly depicted in the following passage:
“I firmly believe that, with the benefit of hindsight, the steps we have taken to diversify and mitigate the damage will demonstrate to the marketplace that this period has actually been a strong net long-term positive for B2Digital and its shareholders. Across many industries, the economic fallout we have seen over recent months is both crisis and opportunity… For our part, we have become more flexible, more diversified, more determined, and better situated for future growth based on the assets we have picked up, including in our One More Gym B2 Official Training Facility division. Equipment, space, and productive resources relevant to our long-term positioning and success have been dumped onto the market at rock-bottom pricing, and we have thankfully been in a position to reinforce our foundation in the process and our growth potential as a result.”
That passage really gets to the heart of why B2Digital Inc. (OTCMKTS:BTDG) could be unstoppable around the next corner.
Trading now on a light share structure at a market cap under $4 million, the notion may be starting to take hold that B2Digital may be a stock situated in a rapidly growing space with pockets and positioning deep enough to be on the right side of the Opportunity/Crisis dichotomy (ie, picking up assets on the cheap, rather than selling them in a fire sale) during the current crisis.
And a serious leader around the next corner.