Fanatics Stock Moves Further Away From an IPO
Fanatics is worth a lot more money.
In an interview on CNBC, Fanatics stock owner and executive chairman Michael Rubin disclosed the company raised an additional $320 million in funding at a valuation of $12.8 billion. The latest raise is more than double the August 2020 Series E equity raise that valued the company at $6.2 billion.
Initially, the company had discussed going public after its Series E round of funding but investors reached out to the company with the offer, probably after seeing aggressive valuations for high-interest private companies like SpaceX, Stripe, and Robinhood.
According to people familiar with the matter, the newest round includes prior investors including Major League Baseball and NFL’s venture arms; venture capital firm Silver Lake Capital; and traditional investment companies like Neuberger Berman, Fidelity Investments, and Franklin Templeton.
Notably, the press release does not include earlier investor Softbank, which often participates in follow-on rounds like it did for Stripe’s recent round that valued the company at $95 billion
Does This Delay Fanatics’ IPO?
The losers in this transaction are retail investors clamoring for Fanatics stock to come to the public markets. Prior to this raise, Fanatics’ coming to the public markets appeared to be fait accompli. Last year Rubin noted the company will “likely” go public, although noted it was a longer-term plan.
In February 2021, shortly after the company scored a massive deal to enter the Chinese market with a joint venture with private equity firm Hillhouse Capital it was reported the company was considering going public to raise capital to fund the geographical expansion efforts.
However, the March announcement that Fanatics was adding three new directors to the board put speculation into overdrive. Although the highest-profile board member addition was Laker’s legend Earvin “Magic” Johnson, the name that carried the most weight with investors was Mindy Grosssman.
Grossman is the CEO of publicly traded company WW International (formerly known as Weight Watchers). At that time, it was heavily speculated Fanatics stock was considering going public as having a board member familiar with the public markets is a key tip-off the company is beginning to plan their IPO strategy.
Rubin Appears to be Less Bullish on a Fanatics IPO
Provided the company has the capital necessary to fully fund the China expansion, Fanatics will not have to go public anytime soon. Since Rubin acquired the company over a decade ago, this is its sixth funding and at approximately seven months by far the quickest time between funding rounds.
Fanatics went nearly three years (35 months) before taking money between the Series D and Series E rounds of funding. The short time between the Series E round and the current round was used to opportunistically buy competitors, most notably WinCraft, to expand outside of apparel into sports-licensed home and office goods.
|Months from prior funding||–||12||26||25||35||7|
|Valuation||$1.8 billion||$3.2 billion||$2.6 billion||$4.6 billion||$6.2 billion||$12.8 billion|
While the company’s financials are private, Rubin has alluded to the fact the company is currently profitable and the fact the company is able to go years without additional funding (and the latest round was at the behest of investors) suggests it’s a profitable entity that produces a level of cash flow needed to fund operations and the newest round is to invest in opportunistic growth in China and in the US via acquisitions.
Additionally, Rubin’s response to going public has slightly changed: “I think going public is an option for us that we talk about a lot but it’s not something we’re focused on today. We’re focused on building a business. But I think we’re well financed and have a lot of growth capital to continue to grow.”
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