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Read the annual report, and don't ask any questions we have no answers to.
Musclepharm is gonna be 100% committed to the guys up in Utah now, $90 million commitment from next year.
This is good news as it is NOT tied up by old contracts, but new ones that make more sense for it.
Musclepharm terminated a contract...no need to say more.
Now it is working intensively on getting all the most popular flavors like Cookies and Cream, Vanilla back in stock at all the major retailers with Capstone Nutrition.
The Muscle Bar is pretty much the same product as Gatorade's....The MP Combat bar is a low calorie bar as Quest Nutrition bars....they are not meant to compete with Snickers bars.
Personally, I prefer something more calorie rich that these products but in moderation...that doesn't mean there isn't a market for these products.
I would be cool if Musclepharm worked out some deal with Nike....
The association with Tiger Woods is a positive one right now....so, that will help in the product management of existing Hybrid products and for the new mass market products.
It seems like the MP Hardcore line's sales substituted too much of the Hybrid line at Bodybuilding.com.....now, that might be reversed if Musclepharm uses Tiger's strength to it's advantage.
Musclepharm might have some problem meeting expanding demands though until Capstone Nutrition is ready for it. I believe the main culprit behind the drop in sales in q4 was related to the termination of a contract with contract manufacturer, and that taught Musclepharm a lesson to own it's own manufacturing.
HIG growth will work out a deal when we are back in the $8 to $14 price range again.
Right now, the protein bars are the ones that add most additional revenue
When there is so much West Coast and Canadian purchases on bodybuilding.com, then perhaps Musclepharm should have adapted the products more to their taste....Meaning more flavors like the White Chocolate and Raspberry that is 100% California. Ghirardelli is known for brownies and chocolate filled with caramel....so perhaps, Musclepharm can find some inspiration there. Ghirardelli is definitely very Californian and thus very detached from anything else in this World.
Bodybuilding.com's customers are not representative for United States as a whole...it got more of a West Coast and Canadian audience.
https://www.google.com/trends/explore#q=bodybuilding.com&cmpt=q&tz=
Musclepharm is well represented in Canada, so Canadians are not buying it through bodybuilding.com any longer.
In California, Musclepharm is well represented through brick and mortar as well....so, that could explain some of the stagnant sales of Musclepharm products
Look at Jim Stoppani, who wants to look like him on the East Coast? young people from California want to look like him. To most others, he looks like the freakin Berlin wall....
Tiger Woods' guys were serving Tiger Wood's interest while Musclepharm's guys didn't know what they were doing.
I hope somebody brings this to Musclepharm's attention though...because Musclepharm is burning millions on this endorsement, so when Tiger plays well in the Masters, it is such a shame Musclepharm doesn't capitalize on it.
It shows who you are dealing with with these endorsements....and makes you wonder whether it is worth for an unexperienced company like Musclepharm.
Good observation though! You cannot blame Tiger Woods for anything...his people are just more professional than Musclepharm's.
Honestly, Musclepharm should talk to Hero Motors and Tiger Woods....and see if it couldn't get this bag sponsorship off it's back...Hero Motors would most likely pay Tiger Woods 4 times more than Musclepharm...in particular if he starts playing well again. Not only could Musclepharm save some money....it might make some if Tiger Woods agrees to it.
That whole bag is a disaster of a sponsorship....if nobody can read the logo nor see it.
It's time for Musclepharm to seriously figure out how to make the Tiger Woods endorsement contribute positively to the bottom line....starting with the things that don't cost anything like a redesign of the golf bag.
You are absolutely right! Tiger Woods TW logo squeezing out a small company sponsor's logo...not particularly comforting whatsoever considering what Tiger Woods delivered to Musclepharm thus far.
https://pbs.twimg.com/media/Bq_AUw5CUAEE5iN.jpg:medium
http://www.gannett-cdn.com/-mm-/162671f13a234997be14623c35453055d9457e86/c=727-0-2791-2749&r=537&c=0-0-534-712/local/-/media/USATODAY/USATODAY/2014/08/05/1407274241000-USP-Golf-The-Open-Championship-Practice-Round.jpg
I think it's time for Musclepharm to put the cards on the table and have talks with all it's endorsements, all it's executives and the owners of contract manufacturers (HIG growth) to obtain more flexibility.
If nothing changes from the conversation, then it might be time to find a buyer of the company....somebody that got the financial strength to honor or exit the commitments to these people as it finds fit.
3G Capital is the ideal partner imo...as it would strive to become number one supplement company in the World from day one, and compete against Herbalife, Nature's Bounty, Schiff Nutrition etc...as well as entering into RTD and protein bar market on a larger scale.
Essentially, Musclepharm would become an extension to Heinz Kraft Foods.
And if you engaged 3G Capital, then I'm quite certain that Whitewave foods from Denver would come with an offer as well.
alternatively it could be sold to some other sports nutrition company that sells well at GNC.
Everybody wants to represent Arnold Schwarzenegger that's a non-brainer....there is a reason why the line got attacked by everybody....and that was that competitors were envious of Musclepharm for that score.
The Arnold Iron line should be sold to GNC if possible.
I know that Musclepharm needs the revenue for lowering manufacturing costs and for upholding agreement with Capstone....but this line would do so much better in the hands of GNC.
GNC could pay as much as what Musclepharm is worth now, giving Musclepharm a solid financial foundation to focus on the Hybrid line.
GNC needs to diversify away from it's own store brands and Arnold Schwarzenegger, with his huge likability, would do just fine for GNC...even after he is not around anylonger.
I'm sure Arnold would go along with this, even for lower royalty payments per product sold....as he would be guaranteed higher payments in total.
Bodybuilding.com sells for over $500 million a year, and it is still growing sales. The top 50 list is a list over the 50 most sold products on the site. Some of Musclepharm's lines are not even listed on the site, like the Arnold Iron line, the MP Hardcore line. That doesn't mean that Musclepharm doesn't sell anything.
The top 50 may count for $150 million sales, with remaining $350 million sales outside the list.
When it comes to Costco, then Musclepharm Combat and Cytosport Whey are the major brands. MuscleTech is huge in GNC...
That said, Musclepharm should strive to be in top 10 with it's MP Combat with all it's expensive endorsements. There is nothing wrong with the product, so it needs to at least sell as well as Jym. Most people find somebody like Jim Stoppani repulsive..but some Californians want to look like superman.
Who says that Musclepharm won't reach $1 million average revenue within 2 years?
How do we know? It got so many different products, that are backed by strong marketing...I mean, so far the sky has been the limit....and even with some bumps on the road, the trajectory looks pretty bright.
We saw normalized customer orders at the 11th week out of 13 weeks of Q1...and management expected like $220 million yearly revenue.
Ain't that encouraging?...even if the year starts a little slow at $40 million, it's a sign that the company is improving and moving towards greatness.
We don't know the exact numbers...but anything with a 4 in front is good news to me....
Musclepharm needed the lowering of manufacturing costs it is getting now....so, the fun really starts here. Lower cost of goods sold translates into more liquidity (similar to the cheap MSLP stock right now)..and that translates into more sales. Sales feed other sales...and bam! you are in the money!
stocks go up and down...and you never get it 100% right.
I know that I will make a lot of money on Musclepharm because it's potential was understated during conference call.
My average price is $6.3 from all my trading in the stock...and that's probably a whole lot better than many here....so, I never bought high...
Now it's the time though to add aggressively to your position...as the stock is dead cheap and the management got no opportunity of diluting the stock on anything that isn't value creating.
If Musclepharm dilutes the stock for compensation to executives, then the bank will demand more in escrow (if not before, then after the fact)...so, that is definitely not gonna happen. If Musclepharm pays down the bank loans then it will have to make the stock rise high, so that it again can raise capital through the capital market....again, making it very unproductive issuing more stocks to employees.
It's not gonna happen for quite some time, meaning the executives' interests are aligned with other shareholders....we are all in the same boat until we make $20-40 million in profits a year.
I don't think they will run anymore campaigns of any sorts....but that their products and their marketing initiatives will do the difference.
Tiger Woods playing well is one more thing that works in Musclepharm's favor when it comes to launching the Combat Crunch, Coco protein and the Energy Sport on a larger scale.
Costco might be ready to pull the trigger on the MP Combat Crunch just because of the increased exposure of the Musclepharm brand through Tiger Woods.
Musclepharm is a sound company that needs a little more credit to work with....
Investors are not always right when it comes to small cap companies.
Many of the companies Frost are involved in have hit rock bottom, and then risen and reached new all time highs....I will keep on adding more Musclepharm stocks at this price level for sure.
Anyting less than $7 is a steal with the company it got.
Why Musclepharm chose to borrow small amounts of money from a bank when it should have been financed with a $30 million corporate debt note of some sort, that's an open question?
The answer is probably time....give it time and I'm sure Musclepharm will get some solution through an investment bank and leave the local bank with the free lollipops behind.
blah blah blah....we are backed by Phillip Frost that is an expert in keeping completely broke biotech companies afloat....so, you don't think he has a solution for a company selling snack bars with 12 million debt and $200 in revenues?
Pretty much, there is no risk at stock price equal to $4.3.
the 16% off were on top of another promotion....There was no doubt this is what happened...as all the popular products somehow were unavailable in all the flavors.
It's like one time I wanted to buy an oven at Big Lots the day there was 20% off on everything....That didn't happen as the store was completely stripped for merchandise.
Musclepharm's marketing strategy seems to be a whole lot more targeted now than what it was last year.
There are lots of interesting initiatives going on within golf, lifting, football, wrestling, surfing and UFC.
Musclepharm works intensively on associating the brand with these sports...
When it comes to UFC, it's a non-brainer. Signing Tiger Woods, makes Musclepharm 100% associated with golf....and with the football youth initiatives and the Colin Kaepernick and Johnny Manziel endorsements, Musclepharm gets associated with Football.
Arnold Schwarzenegger, MP Hardcore, Barbellshrugged.com and Cory's Everyday Squat makes Musclepharm associated with lifting.
Furthermore, the Musclepharm Sports Institute of Science that informs about the science and quality of products is an interesting initiative by Musclepharm now where everybody is so concerned about spiking etc.
The costs associated with informing about the quality of products and bringing awareness to the endorsements and sponsorships might be worthwhile, as I believe we may see a major sales boost of Musclepharm products this year.
it's truly not worth paying for somebody else's birthday party when you're on a budget....been there, tried that!
What appeared to be bad news turned out to be good news:
Musclepharm is not wasting any money.
That Birthday discount was probably some shared responsibility between bodybuilding.com and the different brands....that Musclepharm had no interest participating in that with the most popular Hybrid products.
Now we know that those Hybrid products are very very popular....and that Musclepharm sells a lot each and every single day through bodybuilding.com.
Somehow the shareholders of Musclepharm knew what was going on, as nobody reacted to this.
BB.com sells a lot of different Combat flavors, huh!
http://www.bodybuilding.com/store/musclepharm/combat.html?MCID=CG-PLA-US&CAWELAID=120147270000093847&CAGPSPN=pla&catargetid=120147270000105833&cadevice=c&gclid=CIC7jKGc7MQCFVKUfgod_DAANQ
Musclepharm is selling newly launched Combat Black through GNC and newly launched MP Hardcore through Bodybuilding.com...so, it seems like Musclepharm having problems meeting normalized demand on popular products....and temporarily not being able to let bodybuilding.com backorder products.
I think the discounts at bodybuilding.com right now too generous...so, im fine with that.
The Fitmiss brand could be sold as well...and Musclepharm may get as much as P=1-1.5 for that line as well....
The advantage with this line is that the margins are high and the marketing expense minimum.
If Post Holdings could profit from the Iron line then what should be the problem? As long as Arnold Schwarzenegger agrees to a new owner of the line, there should be no problem.
The line has existed less than 2 years, and Arnold Schwarzenegger got a great likability....so, it's an easy transfer.
Being backed by Post Holdings, the line could have a revenue that's higher than what it got today.
Musclepharm could probably get P/S=1-1.5 for the line....and it would be off the hook from royalty payments to Arnold Schwarzenegger.
Musclepharm could possibly sell the Arnold Schwarzenegger line separately...to Post Holdings, Capstone Nutrition or some other company.
Same thing with licensing rights to the MP Energy Sport.
It's possible that it doesn't need to sell the entire business.
it could be that GNC ordered more than expected....and as Musclepharm has been shipping well in q1, it didn't have enough products manufactured to meet the order. With Musclepharm close ties to Bodybuilding.com....Bodybuilding.com filled in the gap and ran out of inventory...and Bodybuilding.com will be restocked within 1-2 days.
If an inadequate number of products are stocked at GNC or vitaminshoppe, you may lose important shelf space to competitors...Musclepharm doesn't need that to happen.
If true, it proves that Musclepharm isn't doing much channel stuffing
Musclepharm is most likely looking for a buyer or some other solution right now...so, I doubt they would say no thanks to a decent offer like that.
ex the shares at escrow at ANB, that would give us around $14 per share. I think it's a fair deal for both parties and I would definitely consider it.
Also, it's a $10 million net worth increase for Brad.
We should not judge Brad without knowing what's on his mind....he got the facts presented to him earlier than any of us...so, he got the time necessary to do the right thing....whatever that is.
He was unwilling to talk after the conference call....so most likely he was in the process of figuring out what he will do.
Hopefully he does whatever serves shareholders interests the best....and that is to preserve wealth for all of us.
I know...Cory Gregory is endorsing some of those Bodybuilding products too....However, apart from selling some BB branded products it's very questionable that bodybuilding.com wants to be more associated with Musclepharm than it already is.
There are tons of companies and investors out there that would be interested though, buying all of Musclepharm or parts of it...like Whitewave Foods, Glanbia, Nutrabolt (Cellucor), HIG, Big Red, etc etc.
3G Capital could probably make Musclepharm a multi billion company, and distribute the products through every channel conceivable from Tim Hortons bakeshops to Latin American super markets.
I don't see the connection....bodybuilding.com is a retailer and musclepharm is a bodybuilding supplement company....
Bodybuilding.com cannot rely on one brand, but has to rely on multiple brands.
It's not gonna happen....I can tell you that.
Musclepharm should be bought by 3G Capital...Musclepharm is essentially a modern food company, and it works well with 3G Capital's other investments like Kraft Foods Heinz, Anheuser Busch and Tim Horton Burger King.
Also, the main markets for 3G Capital's investments are United States, Canada and Brazil.
There are many other companies that Musclepharm could be bought by...and most likely it won't be anything we think of.
I doubt it will be bought by Liberty Media though as it's not a retail or media company...
the q4 and whole yr sales warranted $6.5 stock price and not $4.30
There was nothing particularly encouraging about the Q4 drop in revenues, but it was comforting to know that Musclepharm saw normalized revenues during Q1.
There is no reason to believe that Musclepharm lied about the normalized revenues as that would be seen as a deliberate attempt to misguide investors with only 2 weeks remaining of the quarter.
Well, that's all Musclepharm needs....some association to the place that is not all too expensive. If it was gonna sponsor the entire OSU we would be talking millions of dollars....and it wouldn't be worth it really as Musclepharm got no specific ties to Ohio.
OSU is sponsored by the Arnold Sports Festival...so, yeah....we may very well see some Musclepharm nutritional sponsorship of OSU....With Cory and Arnold taking care of that.
http://recsports.osu.edu/who-we-are/our-sponsors
I think Musclepharm's stock price will jump after Q1 earnings release.
There won't be that many surprises this time, and the cash burn rate will be declining....so this should help bring back the optimism among investors.
whatever troubles Musclepharm faced with customers in Q4 could very well be isolated issues and nothing that will affect it going forward.
We were told that revenues normalized in q1 across the board, that's good enough for me.