Entertainment and sports content operator Endeavor Group (NYSE:EDR) stock is a unique IPO in that its shares have actually gone up since its debut. While shares were originally priced at $23.50, it was cheap enough to leave lots of “meat on the bones”, unlike most recent IPOs that were hyped up on TV only to collapse and continue selling off for days to weeks after the initial 15-minute spike. While shares continue to undergo a price discovery period, the narrative for this pure re-opening play is very compelling. While the digital streaming wars pit massive networks like Walt Disney (NYSE:DIS), Warner Music (NASDAQ:WMG), Netflix (NASDAQ:NFLX), Amazon (NNASDAQ:AMZN), Comcast (NASDAQ:CMCSA)and ViacomCBS (NYSE: NASDAQ:VIAC) in battle for compelling content, Endeavor owns, operates, and managed the components of the content with its IP and talent.
As the pandemic recovery improves with the acceleration of COVID vaccinations, the Company will benefit from the pent-up demand for live events and the broadcast and distribution of them. Endeavor is a unique one-stop shop to meet the insatiable demand for content operated by iconic Hollywood player Ari Emanuel. Prudent investors looking for exposure in one-stop content powerhouse can monitor for opportunistic pullback levels to consider scaling into a position in Endeavor.
About Endeavor
Endeavor Group is comprised its owned Sports Properties division (20% of 2019 revenues), Events, Experiences & Rights (43% of 2019 revenues) and Representation (36% of 2019 revenues). The Sports Properties include the leading brand in mixed martial arts (MMA) competition Ultimate Fighting Championships (UFC), Professional Bull Riders and Euroleague Basketball. The Events, Experiences & Rights include IMG events, ON LOCATION, IMG Academy, IMG Design, IMG Arena and Endeavor Streaming. Talent Representation include WME, IMG, 160/90, IMG Licensing and Endeavor Content. According to its S-1, Endeavor has over 6,400 people operating in 28 countries with the Americas generating 67% of revenues, EMEA generating $29% and APAC generating 4% of total 2019 revenues. For the year ended Dec. 31, 2020, the Company generated $3.478 billion in revenues with a net loss of (-$623.5 million) and Adjusted Net Income of $84.8 million and Adjusted EBITDA of $572.5 million. The Company owns, operates, and represents over 800 events annually including live sports events in over 25 countries including the Miami open, international fashion weeks, art fairs, music, culinary and lifestyle festivals.
Content Production and Talent Representation
The Company also has its own full-service content production and distribution platform servicing hundreds of sports leagues, federations, events, and brands including The English Premiere League, Wimbledon, and The Ryder Cup. The Company is also one of the world’s largest independent global distributors of sports and entertainment programming selling media rights on behalf of over 150 major clients including the NFL, IOC, and NHL. Endeavor also represents the world’s greatest talent roster of performers, creators, influencers, models, and athletes. The Company through WME was the largest music touring agency in 2019 with 37,000 concert dates and its clients took home more Grammy awards than any other agency in both 2019 and 2020. WME talent has also won more Academy Awards than any other agency and were involved in all the top 10 domestic grossing films. For brand licensing, the Company is the number 1 ranked licenser of entertainment, sports and consumer products on total retail sales exceeding $16 billion.
Surging Demand for Premium Content
Endeavor provides the talent, content, production, and distribution to virtually all the major streaming platforms from ESPN+, Disney+, Peacock, HBO Max, Netflix, and Amazon. From their S-1:
“Our platform allows us to participate in industries that are benefitting from increasing demand for content in all forms. We are positioned at the center of this demand through our owned sports properties, media production and distribution, and client representation businesses. We operate across all genres and benefit regardless of how and where the demand for this content is fulfilled. Disruption has increased the value of sport media rights as illustrated in consistent increases in Contract Average Annual Values (AAV) over premium contracts.”
Endeavor is a one-stop entertainment powerhouse that benefits from the overlapping synergies of all its part.
EDR Opportunistic Pullback Levels
Using the rifle charts on a 60-minute time frames provides a near-term view of the landscape for EDR stock. While we don’t normally use anything smaller than a daily time frame, EDR is such a new stock that it will require more data points for the daily and wider time frame chart indicators to materialize. The most significant price level to pay attention to is the IPO day high at $28.49 as it has become a near-term support on pullbacks. The true test will be when the 60-minute stochastic makes another full oscillation down through the 20-band. The upside resistance is apparently the double top at the $32.45 Fibonacci (fib) level. The 60-minute market structure low (MSL) triggered above $30.35, but a 60-minute MSH triggers under $29.80. These are very shallow price levels due to being a 60-minute intraday time frame versus a wider time frame chart which will materialize with subsequently wider price ranges in time. Traders and risk-tolerant investors can monitor opportunistic pullback levels at the $27.27 fib, $25.48 fib, $23.57 fib, and the $22.48 fib. Upside trajectories range from the $34.73 fib upwards to the $41.46 fib level and up towards $65 to $70 range longer-term.