Twitter is in turmoil with the news that Topps, a company perhaps best known for making collectible cards, goes public via a SPAC.
The reverse merger with the chosen blank check company values the equity consolidation at $ 1.163 billion. This makes Topps like a unicorn. And because it has both e-commerce and digital angles, Topps is technically a
fruit technology company.
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Why do we care? We care because Topps and its products are popular with the same group of people who are very excited to create rare digital items on particular blockchains. Yes, the baseball card company goes public as a first step which could easily be read as a way to put money into the NFT craze without having to buy cryptocurrencies and speculate.
And Topps apparently has a number of assets in the candy space, which I find freakish.
So let’s have a little chuckle as we go through the Topps deck, and then ask if the company is valued based on its current, actual and modestly attractive business, or possible earnings from future NFT-related activities.
So collectible cards
What is Topps? A mix of business units that it breaks down into four categories: Physical Sports and Entertainment (collectible cards), Digital Sports and Entertainment (digital collectibles, apps and games), Gift Cards (gift cards for external brands) ) and Confections (candies).
In terms of scale, the company’s physical products and confectionery businesses are by far its main drivers of revenue. Here is the data:
First, observe that the company Adjusted pro forma EBITDA nearly doubled from 2019 to 2020. That’s an aggressive expansion of hyper-adjusted profitability. And note how much the company’s physical sport activity increased from 2019 to 2020; a gain of almost 50% helped the company develop well last year.