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what about a taste of living in Florida till you are a hundred?
I wonder why sports nutrition has to taste like junk food?
The live hard, die young philosophy is a little misplaced in the supplement industry.
Executives making tons of money while stockholders are struggling may easily lose their jobs....so, it's natural that some CEOs are forced to pay back part of their excessive compensation to keep their jobs.
Brad, Cory and other executive have received quite a lot of shares at this point....and let's face it, results haven't been satisfactory from an investor's point of view....so, it would be natural to anticipate some restraint going forward.
Correction: Brad wants his granted stocks to vest as fast as possible.
Issuing many stocks early on makes the compensation appear smaller (becuz of low stock price), and it makes Brad owner of the shares faster (becuz of faster vesting).
Anyways, 18 million shares of Musclepharm in 2015 as predicted by bellator_exec is 100% nonsense.
Brad won't need anymore endorsers for quite a while. And issuing the remaining 1 million shares available for employees would be completely out of the question with the current stock price.
So most likely, at worst 30% of the approx. 1 million shares will be issued for employees next year. I doubt it though, with stock price below $9...I think it is more likely that the dilution will be close to 1% next year.
Brad is not going to raise capital next year sitting on 10% of the company. The stock price is simply too depressed for him to even consider that at this stage.
I wouldn't be surprised if intentions to acquire contract manufacturers was something that Musclepharm considered doing at some point over the next three years though.
Brad is not necessarily receiving any stocks next year.
My bet is 100,000 shares to Brad or none at all.
Brad issued a lot of shares to himself early on to make them unvested as soon as possible.
Approx. 2 million out of 3 million shares authorized by Frost and Co have been issued thus far.
So, it comes down to what percentage of 1 million shares that will be issued next year.
Really, all that Brad wants now is to have all the stocks granted to him unvested...because he doesn't legally own unvested stocks.
iphone, Muscle Milk, Nike Air, MegaRed....these are great brands within brands. The brand's association to the branded product is logic.
Fitmiss, SkinnyGirl...these brands work for diet products... the brands association to diet is obvious. Such brand names don't work for Musclepharm though. Musclepharm should protect its image of being a sports nutrition company that sells quality sports nutrition supplements, that professional athletes use..
musclepharm women...that's it! I really don't see any need for a brand within the brand for women....
Nike, Apple, Lululemon and other successful brands understand that you need to keep it simple. Similar to Italian fashion brands and similar to Scandinavian minimalistic design....keep it simple!
Focus group questions to women from Musclepharm:
Which brand logo looks coolest, the MP logo or the Fitmiss logo?
Do you think women are less athletic than men?
Do you think women only go to the gym to look sexy?
Do you think women are dumber than men?
What do you think about Chady Dunmore? Do you think it's cool that she writes books that haven't been published yet? Do you think it's cool that she is a music singer that hasn't had her breakthrough yet?
Do you think that the Fitmiss brand is superior or inferior compared to Clif Bar & Co's Luna brand or compared to Schiff Nutrition's MegaRed brand?
Part III MSLP 6% up
Musclepharm doesn't lose that much money though.
Under the current level of compensation and endorsement expenses, I admit that it will be hard for Musclepharm to turn a profit in Q4.
However, in 2015, this picture may turn....The expenses that aren't fixed will have to come down. Also, the dilution will have to come down to the nominal levels of other public companies and the sales have to grow at double digits.
If Musclepharm manages to show us such restraint on the input side while boosting the output...then better times are ahead of us....
conveying trustworthiness and relevance to potential customers through endorsements and sponsorships is one way to gain more business
There are many other ways to gain business and some of them are a whole lot cheaper than that...like offering the customer to try the product for free or listening to customers, delivering exactly what they want.
you definitely have a valid point there...I'm a little bit baffled as to how women's supplements are branded....and it's a little bit up in the air as to how well a Tiger Woods line would do.
Thus far, many of Musclepharm's strategies have worked in terms of generating sales. Trade spending (b-to-b preferential treatment) to big box retailers has been high though....same thing with promotional expenses to end consumers during multiple product and channel launches...all along spending a ton of money on endorsements and sponsorships.
Schiff's marketing and advertising expense is approx. 25% of sales....so in many ways Musclepharm is following Schiff's example, driving sales by spending much money on marketing and advertising.
the optimist point of view regarding dilution might have some merit
Let's face it....allowed compensation in stocks is negotiated between Frost and other lead investors on one side and the management and board on the other side.
It is all about give and take, each side trying to achieve what it wants under a fair deal.
So, these initial levels of dilution might not last forever....unless Musclepharm finances all it's projects through Frost and co.
Even if that was the case, Frost usually brings a lot to the table...so it is not all bad. However, I don't think that is the case as Brad seems to be very much against raising more capital at a steep discount.
So, our fears might be misguided and Musclepharm might treat shareholders better than what we think. The share price is close to $8...it should matter to the management after a year with 80% sales growth and lots of shares awarded to management.
In 2015, the management is forced to deliver something to shareholders to survive.
I just added to my position.
Despite continuous dilution by management in the past, I see no particular interest from the management and board to continue down that path in 2015. Those in power need the share price to appreciate.
There are enough important endorsements at these stage to support up to $2 billion in sales. I mean, Musclepharm invested in Arnold Schwarzenegger, Tiger Woods and Johnny Manziel....pretty heavy names.
Musclepharm is getting quite so important to contract manufacturers giving it some leverage in terms of pricing pressure and interesting alliances.
I'm sure Musclepharm will improve branding efforts and revamp the Fitmiss project.
Musclepharm seems to be a fair bet at this price...the current price level and price drop more or less dictates what the shareholders' letter will tell us.
exactly, women's supplements command a premium...that's why Musclepharm needs to get it's act together and start selling women's supplements under the MP brand umbrella.
The Fitmiss brand name serves no purpose...Nike and Under Armour get it. Women are no less athletes than men...so quit talking about fitness, sexy and all that kind of nonsense when it comes to women...talk about sports and talk about strength, endurance....even if young girls for the most part consume the products to look good. In America being authentic counts!
Like I mentioned, Adidas and Puma got much weaker sales than Nike because of mixed messages...What is Adidas in America? something they wear in the streets of Bronx or something athletes wear....I truly cannot tell. Puma's image is even more confused...I don't get it!
adidas and puma made the mistake targeting the street wear and lifestyle segments...where nike kept it's focus on athletes...I'm afraid Musclepharm is doing the same thing with Fitmiss brand.
there are too many short term investors.
Musclepharm is a great company with a few fixes.
Musclepharm probably spent a little plenty on the Tiger Woods endorsement being such a small company....but I guess it might pay off if it can capitalize on the name through a separate line of products.
I'm not too much of a gambler and initially I wasn't too intrigued by the news of the Tiger Woods tie up...but as long as Nike supports Tiger Woods, I guess he got some value as a name.
The Fitmiss brand is not my cup of tea...I think it hurts Musclepharm's branding efforts which is quite unfortunate.
The GNC shelf with the lame Fitmiss banner: "Strong is the new Sexy!" ..that doesn't help Musclepharm selling the MP line or Arnold line.
Really, any branding expert would agree with me that Fitmiss is more of a "miss" than the proper "fit" for Musclepharm.
Really, Musclepharm needs to strengthen the brand by extending it, instead of coming up with new names that are weak.
Under Armour, Nike, Apple and Musclepharm....really these are great brand names....We don't need any other names.
Having an Arnold line along with a Tiger line....more power to the brand, more reach....that's cool with me.
Learn from the mistakes of Gatorade...figure out what didn't work about the Tiger Woods products and don't make the same mistake.
I'm beginning to think that legends got just as much branding power as current stars....just look at George Foreman and Michael Jordan...their branding value increased after they retired from sports. Perhaps Musclepharm can learn something from these in their approach to Tiger Woods.
just my 5 cents...
Nike got the following categories of products all under the umbrella of the Nike brand:
Men
Women
Kids
Furthermore, you got some endorsed products (Nike TW and Nike Air Jordan) and specialty branded products like NIKE SB (skateboarding)
So, a good question: What's wrong with the Musclepharm brand for powder for women?
Honestly, I think the musclepharm brand name is the opportunity....it looks good and sounds good and it got all the endorsements it needs. Fitmiss on the other hand, it looks and sounds bad and it got no endorsements whatsoever.
I would ditch the Fitmiss brand right here and right now....and thenI would borrow some of the colors from Lululemon and make some packaging similar to the COCO protein....with curves like Coca Cola...thatll work and thatll make me some money!
Musclepharm has no problem with MP and Arnold Schwarzenegger branded products imo.
The Fitmiss brand needs a lot of revamping though...Musclepharm needs to come up with something most women would like to buy. Take a look at Lululemon, Luna, Isopure, Kind, Whole Foods Market and Apple as well...Understand what women really like about a brand and then combine that with what you know about performance sports nutrition.
Musclepharm doesn't need to sell for $5-10 million a year to women...it should sell for $50-100 million.
I'm long Musclepharm...but damn, this is bad!
Quote from http://fitmiss.com/
I AM A FITMISS™
The last few years have been a whirlwind for Chady, and she isn’t showing signs of slowing down. Last year, she launched her own fitness camps and just recently, became the Fitness Curator for a well-known, upscale Hollywood hotel, creating programs and in-room Fit-Kits for guests to stay in shape on the road. If that’s not enough, she’s written two books she hopes to publish this year. She admits that balancing it all isn’t easy. “I have to schedule everything, every hour. If it’s not in my agenda, it won’t happen. When I get overwhelmed, I just say to myself, ‘Chady, this is your moment. Look at all you can do when you don’t limit yourself.”
This is completely irrelevant information to me...I read this and I feel I'm in the wrong place.
Musclepharm is great brand, Fitmiss not so much.
Really, the Fitmiss brand should be discontinued in my opinion.
There are credible women oriented sports nutrition brands out there like Isopure, Luna, Kind and Zing...These brands speak to women.
If you want to be the athlete's company and nothing else..well, then who told you that you needed a separate brand for women?. Musclepharm should extend the brand and make "a line" for women. Clif bar had to make a separate brand Luna for women because the Cliff bar brand is too masculine. Musclepharm doesn't have that problem, it could easily be extended to women...just change the colors and the products that that line.
Musclepharm could add somebody credible as endorser for women and that's it.
The slogan is terrible: Strong is the new Sexy! C'mon! that's bullshit!
The Fitmiss brand, website and products are typical for the sports nutrition industry where you find many companies that don't have a clue about marketing. You can actually hire people that are good at these things.
who told you that wholesales prices are eroding? GNC doesn't demand a lower price because Musclepharm enters Sam's Club....it couldn't care less as it's audience is another.
Musclepharm is expanding at GNC.
Also, marketing expenses (including advertising, endorsements and sponsorships) are a prerequisite for selling worthless powders
I want to see Musclepharm products everywhere....We need Musclepharm to enter 7eleven, CVS, Walgreens, Target, Whole Foods Market
Also, I would like to see products that don't work to be revamped...I think the fitmiss line is terrible....i just cannot see who would buy those products?
the price action has nothing to do with minor lawsuits or the character of executives...that's not what this is all about.
The stock went close to $6 earlier in the year because of the shareholders' letter and lately it dropped to close to $9 now on the Q3 results and a somewhat blurry conference call. The 500,000 shares going to Brad probably didn't help either...I mean, that was a lot of issued shares to swallow, even if announced earlier in the year.
That's it, the price action got absolutely nothing to do with some frivolous lawsuit in California over labels.
I think that MSLP is cheap here, as the next shareholders' letter gotta be better than the one we got last year. I mean, 1.5 million shares issued gotta be a one timer...it gotta have something to do with awarding for initial accomplishments and awarding executives for wearing multiple hats. $200 million in revenue, market cap close to $100 million and stock price flat over year....Then it is time to delegate responsibilities and base compensation on past stock performance....when you have delivered stock appreciation, then you are awarded.
I'm optimist, I think things will change for the better...the executives got a lot of shares, they are young and they got their expenses....They want to make this stock fly, they have the same interests as us....who knows, perhaps Wynnefield Capital got something to offer the company when the stock heads towards $20.
in order to do that, it needs to treat it's stakeholders better than any other company....because nobody becomes a World Champion all alone.
The lower ranking employees supports the project to the maximum if they feel that they are appreciated and that they are part of the success. Perhaps this is how it works at Musclepharm, one report on glassdoor suggests differently...but it could be biased..
Current and potential shareholders will hold onto and keep on buying into the story if they feel encouraged to do so by what the management is doing.
Creditors will lend money to Musclepharm in larger amounts and at better terms if they feel it is well worth doing so. It's all about credit worthiness.
Lead investors like Frost will help more if he feels he is treated well. He did indeed do that, so that's a compliment to the company.
I'm sure that Musclepharm acknowledges that this is what it takes to succeed in business, otherwise it wouldn't be where it is today....but there are areas of improvement and I think it should work on them.
Musclepharm can make it big if it wants to....there is no reason why it shouldn't become the largest sports nutrition company (protein powders) in the World.
"I'm part of something bigger than myself"
Going forward, Musclepharm needs to convince current and potential stakeholders that this is the mindset of the young guys at Musclepharm.
damn, the price action is pretty discouraging to say the least...
I agree with your sales projections...$240 million is a conservative bet for 2015.
Quote from Musclepharm's shareholders' letter in 2013:
"Over the past three years we achieved exponential product sales growth, growing from around $1.4 million in revenue for 2009, to approximately $78 million in 2012. However, to finance that growth from essentially a startup mode we had to utilize dilutive financing instruments, which were very expensive and hurt our financial performance, and as one would expect, our stock price suffered too. All of us at MusclePharm believe that our market capitalization today is not a valid reflection of our Company's current underlying fundamentals.."
sounds like Brad doesn't like dilution much..kind of encouraging after so much in 2014...
that's not happening as 2014 had too much dilution, too little profitability and some errors in terms of wasting too much money on a departing employee....apart from that, everything else was okay.
it would have been nice had the SEC investigation be closed...but thos kind of things take time.
The new business model of Musclepharm requires a cost focus....every penny counts.
This is not the kind of company that pays departing employees particularly well.
Musclepharm is not a pharmaceutical company that negotiates with insurance companies...it is not a p/s=5. Musclepharm negotiates with big box retailers, that don't pay it that well.
At best p/s=2 in an acquisition and at best at p/s=1 otherwise (unless it turns into a Schiff Nutrition kind of company).
I hope we see the transformation coming in 2015...that Musclepharm means this for real....because if that is the case, it's not a $10 stock anymore...it should be an $18 stock by next Summer.
Musclepharm is not perfect company...
I surely hope we don't see more peculiar actions from Musclepharm's side going forward....like the Sydney Rollock resignation where he left with 0.5% of the company for no apparent reason.
It might not be the best signal to institutional investors either that 1/3 of shares in the large employee incentives plan went to the CEO. Musclepharm has grown, so Musclepharm should be delegating responsibilities away from the CEOs desk.
Musclepharm entering the food and beverages business through mass marketing is a major challenge that requires a wider organizational structure....
Brad should of course be awarded for bringing it to life and making it happen. Much of the execution should however be delegated to those with expertise and experience.
Musclepharm needs to show the market that it can transform itself into an efficient operation that can face the competition.
The emphasis should shift towards bottom line growth over top line growth.
not particularly important if they are frivolous or minor...only the big lawsuits matter.
Profitability, costs, dilution, major lawsuits and the prospects of the future are important to shareholders...everything that analysts and investors covered at the conference call.
All we can hope now is that Musclepharm's management and board got the message at the conference call
..or he will receive $10k in an undisclosed settlement...this is not important to shareholders!
Musclepharm's image is improving in many ways...
The brand image of Musclepharm is improving as marketing, endorsement and products are getting much better.
Similarly, the corporate image is strengthening as Musclepharm becomes associated with retailers like Costco, GNC, Costco, Walmart and Sam's Club. It's kind of impressive for such a young company.
However, the image of Musclepharm to investors has a harder time improving with the SEC investigation going on. All that Musclepharm can do is letting it's lawyers deal with this