Fanatics is a leader in sports merchandise. The company has signed exclusive licensing deals with top sports leagues, like the NFL and NBA. That gives it the right to sell branded merchandise to fans through its e-commerce site and retail stores.The company wants to become a leader in everything related to sports. It's expanding into digital collectibles, sports betting, and trading cards. It has accelerated that bold vision through acquisitions. It bought trading card leader Topps for $500 million after beating that company out for trading card rights with the MLB. It also bought clothing brands Mitchell and Ness and has expanded its sports betting.Fanatics is trying to "build a company that's beloved by billions of sports fans globally," according to founder and CEO Michael Rubin. He has bold ambitions for his company, including growing its profits significantly in the coming years.
That growth potential has many investors eagerly anticipating its initial public offering (IPO). Here's a look at how to invest in the stock when it goes public and other sports stocks to consider while waiting for its IPO.
Is it publicly traded?
Is Fanatics publicly traded?Fanatics was not a publicly traded company as of late 2023. It had yet to complete its initial public offering (IPO).
When will it IPO?
When will Fanatics launch an IPO?
Fanatics didn't have an IPO on the calendar as of late 2023. However, the company was taking steps towards an IPO. It hired Andrew Low Ah Kee as the CEO of its merchandise business in September 2023 and hired the former head of Meta's (META -2.03%) investor relations, Deborah Crawford, earlier in the year to be its first head of investors.Fanatics Chief Financial Officer Glenn Schiffman highlighted hiring a head of investor relations as a key step towards its eventual IPO. Crawford will help the company "share the story, shape the narrative, and be involved from the first minute of the first day of drafting the roadshow presentation and drafting the S-1," according to Schiffman. Although the CFO didn't comment on the exact timing of an IPO, he said it would be in the medium term, putting it in the next 12 to 24 months, based on the state of its business, the markets, and its goals. That suggests an IPO could come before the end of 2024.
Alternatives to Fanatics
How to buy Fanatics alternativesSince Fanatics isn't public yet, you can't buy shares in your brokerage account. However, investors interested in the sports apparel and betting company do have alternative options they can consider. Here are three alternatives to investing in Fanatics that investors can buy while they await its IPO:
Nike (NKE 2.05%) is the world's leading designer, marketer, and distributor of athletic footwear, apparel, equipment, and accessories. Nike is an iconic sports brand. It's steadily growing its sales and profits as more customers use its products to play sports or engage in fitness activities.
2. Dick's Sporting Goods
Dick's Sporting Goods (DKS 0.96%) is the country's biggest sporting goods retailer. It had 860 stores across the country as of late 2023. In addition to its physical locations, Dick's has a meaningful e-commerce business, with 70% of those sales fulfilled by its stores. The company enjoys a growing market share across the footwear, athletic apparel, team sport, and golf categories.
DraftKings (DKNG -0.03%) is a digital sports entertainment and gaming company. It's the official sports betting partner for the NFL, NHL, PGA Tour, NBA, and UFC. It's also an authorized gaming operator of MLB. The company also has a marketplace of digital collectibles, including curated non-fungible tokens ( NFTs).Investors interested in one of these alternatives to Fanatics can buy shares in any brokerage account. Here's a step-by-step guide to investing in these sports stocks.
- Step 1: Open a brokerage account: You'll need to open and fund a brokerage account before buying shares of any company. If you still need to open one, here are some of the best-rated brokers and trading platforms. Take your time to research the brokers to find the best one for you.
- Step 2: Figure out your budget: Before making your first trade, you'll need to determine a budget for how much money you want to invest. You'll then want to decide how to allocate that money. The Motley Fool's investing philosophy recommends building a diversified portfolio of 25 or more stocks you plan to hold for at least five years. You don't have to get there on the first day. For example, if you have $1,000 available to start investing, you might want to begin by allocating that money equally across at least 10 stocks and then grow from there.
- Step 3: Do your research: It's essential to thoroughly research a company before buying its shares. You should learn about how it makes money, its competitors, its balance sheet, and other factors to make sure you have a solid grasp on whether the company can grow value for its shareholders over the long term.
- Step 4: Place an order: Once you've opened and funded a brokerage account, set your investing budget, and researched the stock, it's time to buy shares. The process is relatively straightforward. Go to your brokerage account's order page and fill out all the relevant information, including:
- The number of shares you want to buy or the amount you want to invest to purchase fractional shares.
- The stock ticker (NKE for Nike, DKS for Dick's Sporting Goods, or DKNG for DraftKings).
- Whether you want to place a limit order or a market order. The Motley Fool recommends using a market order since it guarantees you buy shares immediately at the market price.
Investors would follow a similar blueprint to buy an IPO stock like Fanatics when it goes public. Once shares become available, select Fanatic's chosen stock ticker to buy shares through your brokerage account.
Is Fanatics profitable?Diving into a company's profitability is a crucial aspect of investment research. Unfortunately, as a private company, there isn't a lot of publicly available financial data on Fanatics, so it's unclear if the company is consistently profitable.However, according to CNBC, the company estimates it will generate about $8 billion in revenue in 2023, which includes its Lids segment but excludes trading card rights.Fanatics' founder and CEO, Michael Rubin, had bold long-term profitability goals. He believes that Fanatics' sports betting and other business segments could achieve $8 billion in annual profit in the next decade (equivalent to its anticipated revenue in 2023). If Fanatics can achieve that level of profitability, its stock would likely gain significant value after its IPO.Investors interested in Fanatics should closely examine its profitability when the company releases its financial data before it launches its IPO to see if it's on track with its profit targets.
Should you invest?
Should I invest in Fanatics?While Fanatics isn't public yet, the company aims to complete an IPO in the next 12 to 24 months. That gives investors lots of time to research the company. This process could confirm your thesis that it's an attractive investment opportunity or turn you off from buying shares.Here are a few things to consider that might lead you to buy shares when the company goes public:
- You want to invest in a company capitalizing on the fast-growing sports entertainment industry.
- You think Fanatics can grow its revenue and profits at a fast pace following its IPO.
- You believe the company's move into sports betting will have a big payoff.
- You're comfortable investing in newly public companies.
- You like to invest in founder-led companies.
- You're not very interested in sports.
- You don't like to invest in volatile stocks, which is typically par for the course for newly public companies.
- You're concerned the company's acquisitions might not grow value for shareholders.
- Given all the competition in the space, you're not sure if the company's move into sports betting will pay off.
Related investing topics
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ETFs with exposure to Fanatics
Because Fanatics hasn't completed its IPO, it's not in any passive investment funds like exchange-traded funds (ETFs).
However, investors interested in the company have some ETFs they could consider to gain upside to the company's markets, like sports betting and consumer discretionary spending.
The Roundhill Sports Betting & iGaming ETF (BETZ 0.1%) focuses on the fast-growing sports betting and iGaming markets. The ETF held shares in more than 30 stocks in late 2023, let by DraftKings at 12.8% of the fund's holdings. This ETF gives investors exposure to the sports betting market Fanatics aims to capture.
Meanwhile, The Consumer Discretionary Select Sector SPDR ETF (XLY 0.44%) holds shares of leading consumer discretionary stocks, like e-commerce giant Amazon (AMZN -0.38%) and athletic footwear, apparel, and equipment maker Nike (NKE 2.05%), which were 22.3% and 3.9% of the fund's holdings, respectively. The ETF gives investors exposure to the e-commerce and sports apparel markets Fanatics aims to capture.
The bottom line on FanaticsFanatics wants to become a beloved sports brand. That could drive robust revenue and earnings growth for the sports product and betting company, which could boost its stock price following its IPO. That growth potential makes it an interesting upcoming IPO to watch.
Investing in Fanatics FAQs
Is Fanatics going public?
Is Fanatics a private or public company?
Who owns Fanatics stock?
Fanatics has attracted several well-known investors by raising capital privately. In March 2022, the company raised $1.5 billion from Fidelity, BlackRock (NYSE: BLK), and Michael Dell's MSD Partners. Earlier investors also included Major League Baseball, the NFL Players Association, and the National Hockey League.
Who are the new investors in Fanatics?
Fanatics last raised capital from investors in late 2022, bringing in $700 million at a $31 billion valuation. New investor Clearlake Capital priced and led the round, which also featured a new investment from LionTree. In addition, existing investors Silver Lake, Fidelity, and Softbank (OTC: SFTBY) participated in that last investment round.