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Most likely, Musclepharm has been forced to put all project regarding Tiger Woods on hold, or tried to come up with some creative ways of using that endorsement constructively.
Musclepharm surely hasn't been lucky with his performance, as he hasn't played well at a single tournament for the last 12 months.
We have 1 year anniversary for Tiger Woods' endorsement of Musclepharm...hip hip hurray!
I'm just afraid the brand is not as popular with the end user as it used to be...I just don't see the same enthusiasm in online reviews as I saw a few years back.
Dymatize, Optimum Nutrition and lately Cellucor and Quest Nutrition seem to be more popular and loved in the market right now than Musclepharm. Their products are straight forward high quality with straight forward marketing messages not as loud and repetitive as Musclepharm. They don't appear selling well because of endorsements and sponsorships, but because of the quality of their products, and their credible message in their marketing.
The protein bars came off strongly for Musclepharm, but signing the Cavaliers to promote them seem kind of a bet. You don't gain much global, nationwide or local market access from sponsoring the Cavaliers, unless they win the NBA Final. The Cavaliers are not the Bulls, the Lakers, the Heat or the Celtics...
IMO, the brand lacks some substance and direction.
I might be wrong. However, the popularity of the brand should be reflected in the quarterly revenues, and they have been declining versus Q1 and Q2 from last year, for 3 straight quarters. Seasonality or not, it's not highly encouraging or comforting.
Possibly the brand has or will gain in popularity going forward and surpass past revenue numbers, we will have to wait and see as quarterly numbers are announced.
Again, there is no evidence that they have built a $200m+ business yet.
Musclepharm not reach past levels of revenues in Q1, inventory levels were low at the end of Q1 and it was struggling filling in orders in the beginning of the current Q2.
Now Fall and Winter seasons are approaching, meaning seasonally weaker sales than for Spring and for Summer for the industry at large. Furthermore, the strength of the US versus the Canadian dollar, the Euro and the Brazilian real should continue to make the International sales challenging.
The loss of exposure through UFC going forward could hurt sales, the loss by the Cavaliers in the Finals could limit the worth of that sponsorship, and Tiger Woods' continuing weakness makes it hard to imagine that Musclepharm will capitalize to the fullest on that endorsement.
However, Colin Kaepernick and Arnold Schwarzenegger remain to be positive drivers for brand, and Bill Phillips might as well down the road.
There are opportunities ahead, but many of them might be associated with further dilutive financing as mentioned by Wynnefield.
I'm not so sure that it is just a matter of investors and creditors having unrealistic expections, the company has not delivered particularly good results over the last 3 quarters imo...it is what it is! Wynnefield Capital, ANB and the lender that sent the Ceo a margin call, forcing him to sell his pledged shares....they all acted on the hard numbers they were presented.
Whenever the market, stakeholders are presented some good numbers, then they may change their opinion about the company a whole lot more easily than without such good numbers
how is this gonna be a $50 stock?
There is no evidence that the company is growing revenues versus last year's $177 million yet as far as I know. Q1 was lower than last year, and the company's cash levels and inventory levels combined at the end of Q1 were worrisome according to Wynnefield and any sensible investor.
So millions of shares might need to be issued to raise capital on top of the 3.5 million shares that will be issued if the proxy statement's employee incentives plan and employee stock purchase plan pass.
So, it is hard to imagine this company being a $50 stock to me, or just a $15 stock for that sake. I believed that the stock could reach the skies in the past, but Musclepharm's poor financial performance, high executive compensation and contractual agreements with top athletes and private equity owned contract manufacturer made me think differently.
I wonder who is gonna buy this now?
http://www.google.com/#q=quiksilver+stock
Quiksilver is soon worth less than Musclepharm.
IMO Quiksilver is not a great company, but at least it is a market leader when it comes to surfing apparel.
I doubt that VF Corp or Nike should be interested in the company, because if it was....then Quiksilver would probably have auctioned itself long time ago with it's unsustainable debt load.
However, I do believe in the rumor that VF Corp might be considering buying Puma AG, with the Euro low, the valuation low and the limited debt.
Debt to equity at Puma AG is 0.03, while it is 4-5 at at Quiksilver....it's a non-brainer what not to buy based on that metric alone.
Listening to Codie, Quiksilver is a whole lot more attractive in bankruptcy than as going concern.
Drexler's job right now gotta be to keep Musclepharm afloat, and make it show a few quarters of profitability before auctioning it....A company will sell for much more if it has turned around, even if the turn around is not sustainable....all that matters is that the buyers believes it is.
the journalist didn't get much info from Musclepharm regarding the revenues it seems:
same trading pattern was observed when the stock price went from $4.5 to $6.8 in a couple days after Q1 earnings call.
it is possible that the company will need to raise some capital to finance it's growth, considering it's finances aren't particularly strong and it now got a new chairman of the board that most likely ain't in any gambling mode
I was starting to question the market rumor, but apparently it was true.
It wasn't just Nelson Obus 40,000 shares that were sold. Nope, 10 times more shares we sold by Wynnefield Capital...ouch!!
It's not based on anything as far I can see.....
If Wynnefield Capital sold his 40,000 shares as an example....all he needed to do, was to file it with the SEC. He wouldn't need to tweet anything to complete strangers.
A partnership with existing products sold through another direct marketer is probably what it comes down to.
to me it makes sense selling some good sports nutrition products for women in Brazil as primary market.
the plus 40 years old market in America is another option, that would probably be targeting middle aged suckers living in Florida and Arizona.
It's all about finding the right direct selling partner though as doing both retail and direct selling under same roof probably ain't gonna work.
Somebody gotta add these products to their existing catalogs in whatever market Musclepharm decides to focus on.
That is probably meant for markets like Brazil, Mexico and Russia, and through a partner like Avon and Natura.
Fitmiss and Nature Sport products might be good for that purpose.
Unfortunately, most of Musclepharm's products are directed at sophisticated guys living in metropolitan areas in the US, heavily supported by branding efforts on the Internet. Direct selling audiences are completely opposite to that, where it is primarily less sophisticated women living in emerging markets, that are pushed to buy some nicely packaged functional and good-for-you products.
Avon is currently having a partnership with Greek Korres for the Brazilian market where it faces tough competition from Natura.
Musclepharm doesn't really have the resources to engage in direct selling on it's own, the timing is horrible now where the Brazilian real and the Russian ruple are so low.
BTW, BPI Sports is in Walmart now, and Six Stars that is in Walmart as well has come up with a new look, and a new web-site as well, it appears
http://www.sixstarpro.com/products/six-star-whey-protein-plus/
Nice!
Yup, it does look like Musclepharm got a whole lot of work to do with it's marketing, and it's not just adding more endorsements and sponsorships, it's just as much a matter of keeping up with competitors in terms of packaging and appeal of communication.
IMO, this is text book marketing, when it comes to conveying trustworthiness to potential consumers.
https://bpisports.com/
Apart from third party seals of quality verification, endorsements and sponsorships convey trustwortworthiness as well....however, sometimes less is more than enough, and sometimes less is more.
IMO, Musclepharm is trying to overextend, and it might backlash financially and in the effectiveness of marketing.
I believe that the secret to Musclepharm's initial success was it's focused brand identity and it's roots in the ufc and nfl.
sell the stocks and/or work with SEC, sue the company if he believes it is worth it
If the board doesn't respond, what else can he do?
I looked this Steinhauer up....and he doesn't appear to be any reliable source whatsoever, making me believe it's not worth mentioning any further
That said, it's a possible scenario that Wynnefield Capital will sell it's musclepharm shares if it doesn't trust the company, and thereby give up on the proxy fight.
Ackman did that with JCPenney, Icahn did that with Lions Gate Entertainment....they just gave up fighting more with boards and ceos by selling their stocks in the companies...a really good decision when it came to JCPenney, and a really bad decision when it came to Lions Gate Entertainment.
perhaps he feels it is too late doing anything about the stock price, but it might be worth suing Musclepharm later on.
as Panchojimenez suggested: if you don't trust a public company, then you probably shouldn't own it's stock.
perhaps the company's expectation for sales performance is so unrealistic, that their sales executives got no chance of meeting the numbers...but are blamed for not meeting these unrealistic expectations regardless.
Musclepharm is a maturing company, it sells for 50% more than what Nestle's Butterfinger sells for, which in itself is quite impressive. So, it's a question whether Musclepharm can just grow non stop, with limited liquidity and with the identity of the company leaving the roots of the UFC and NFL. Also, the company is suffering from negative press, and damaged reputation because of protein spiking accusation, where it got no third party quality verification conveyed in marketing to defend itself with.
I find the Musclepharm Sport Science Institute being more of a sort of self verification that probably makes it less effective at conveying trustworthiness, than had the verification appeared more thirdparty.
Chromadex verification seal emphasized in the marketing of BPI Sports, professionally implemented by Zimmerman advertising is giving a whole lot more trustworthy and clear message to consumers regarding the verification of quality imo. Simplicity is a deed, there is no need to excuse too much...like a bunch of old ladies...let somebody independent, that is trusted by consumers, verify the quality of your products.
A margin call is a material event imo, but we were not given any details whatsoever, even when it involved the founder that is the ceo and the chairman of the board.
It is not good.
false sales projections, margin call, non disclosure of material events, poor liquidity management, and excessive issuance of stocks for non value creating compensation and endorsements.
Couldn't it be that shareholders sell their stocks, that creditors won't lend money and that employees leave the company because of that?
Brian Cavanaugh is a competent retail guy looking good in a suit, the kind of guy they respect in places like Ogden Utah, so it's kind of odd that he is leaving.
I'm afraid that there is no room for anybody that is smarter in the room than the current top management, and that there is no room for any employee or board member asking too many questions or attempting to correct things that appear to be against shareholders' interests.
Tell me I'm wrong, I would love to be...but where is the evidence that I am? so many board members, CFOs and sales executives have left the company over a short period of time.
You might think that a Musclepharm executive is carrying a roll of $100 dollar bills, but unfortunately it's only the outer bill in the roll thats a $100 bill. The rest of the bills in the roll are $1 dollar bills.
I haven't yet seen a single picture of the Musclepharm Sport Institute of Science.....I wonder if it is part of University of Colorado?
it's very simple:
Don't change the bylaws, lower the compensation in 2015 and raise the capital.
It's a non-brainer to me.
Codie, I have to admit that had I followed all your advices, then I would have been a whole lot better off today.
Musclepharm got a credibility problem imo.
There is no closure of SEC investigation, there is no uplisting to Nasdaq. Three independent board members demanded by SEC just resigned. After the announcement of proxy statement, the company changed it's bylaws to protect board members, which according to Wynnefield Capital is completely unacceptable.
The Ceo defaulted on pledged stocks without any explanation whatsoever.
There was a waiver for some breach of loan terms that expired May 31, that we haven't heard anything about.
The current situation might change for the better, but for now.....I will just listen to what Codie got to say.
sucking the last dropz out of musclepharm?
Lindsey Vonn, surely ain't sucking ...Red Bull seems to be using her very actively in their commercials....Sad, Tiger Woods, that was much more of an athlete than her, is falling apart in this manner
IMO, the older endorsements and sponsorship seem to be of a better quality than the later ones. Colin Kapernick and Arnold Schwarzenegger appeared to be endorsements that promoted sales. And the UFC sponsorship more or less defined the brand.
I'm kind of surprised that Musclepharm hasn't signed more warm climate and Latin endorsement and sponsorship contracts.
I mean, ain't most of the demand where the sun always shines, the Latino culture is strong and where people are moving to, like Nevada, California, Arizona, Texas and Florida?
Aren't places like Sao Paolo, LA, San Antonio, Brisbane and Sevilla a little more relevant than Cleveland or Manchester?
Typically, people that live cold places don't feel like going much to the gym during the Winter months, but more inclined to play darts and pool, and have a few beers.
Where I live, in Miami, for whatever young people there are, they are probably buying these workout products at close to same rate all year long.
Latinos, are a huge part of the young population in the Southern States in America, and they cherish their roots.
So, how come no Latinos? and how come no San Antonio sponsorship versus Cleveland sponsorship?
I understand there is a strong bodybuilding culture in States like New Jersey, New York and Ohio, but I would assume that Southern California and Texas, with it's nicer climate, larger populations would offer more in sales potential. I might be wrong.
There have been 3 board members resigning at the same time....some very bullish sales projections have been delivered by management and multiple marketing contracts have been signed while the company's liquidity is limited.
Furthermore, Ceo's stocks he pledged to secure some loan, which we have no disclosures about, had a margin call/defaulted last month.
On the same day we were made aware of this margin call, the company changed it's company bylaws....and a few days later during conference call, we were told that the company had no problem fixing it's loan issues by Estalella....but we have never told what happened to the waiver for credit line that expired May 31.
When shareholders aren't given any information about such material things, they might tend to start speculating what exactly it was that fixed it's credit problems? and what that made 3 board members resign at the same time?
Whether it's worthy to support Wynnefield Capital's initiative is a personal choice, in America, any shareholder should however be allowed to raise whatever questions he deems necessary...if there is something that appears to be important, that hasn't been disclosed.
Change of shares outstanding and many other issues of interest to shareholders are normally disclosed at earnings and conference calls. However, when it is in the shareholders' interests to disclose something that is truly material information at time of event, I would assume it would be in the interests of a shareholder friendly company to do so.
It seems like Wynnefield Capital ain't stopping with it's proxy and bylaws fight any time soon. Obus sounds like he is pissed.
Hopefully, the company has something relevant to tell shareholders in the coming days in relation to Wynnefield Capital's letter. More openness and more urgency in responding to critics might be a good strategy in making shareholders trust the company more.
I guess you are right....that Musclepharm's hardcore positioning might be more of a limitation than it's packaging vis-a-vis Cliff and Quest.
Perhaps it's doing the right thing in terms of packaging, and our past expectations of explosive sales growth lasting forever have been completely unrealistic, as the brand is restricted to a narrow niche of the protein product market....serving guys that are highly involved during the buying process.....explaining why Musclepharm needs to spend that much money in marketing being loud on social medias, versus Quest, Cliff and Vega Sport that do less from having a broadly appealing positioning.....and versus Herbalife, Avon, Natura, Nature's Sunshine and other direct selling companies, that serve soccer mums and other less sophisticated buyers in countries like Russia and Brazil.
the more happiness and the less friction in the buying process of snack products, the more sales.
The only benefit of letting all the protein bars look the same, and letting them look similar to Gatorade that got 3 different bars that almost look the same....is that you maintain a very uniform brand identity, in terms of colors.
However, Musclepharm is all over the map....with all sorts of new product lines....not doing much to protect the brand identity in general
I believe in happy products....and I have no problem with the hybrid line as such when it comes to powders.
When it comes to snacks and energy drinks, you gotta introduce a few more bright colors and make your products stick out a little further. Monster Energy and Quest Nutrition have both done it successfully.
You eat with your eyes as well....and some consumers may choose a product over another, not entirely based on a certain flavor, but based on a color of the packaging as well, that personalizes the preferences and identity of those consumers.
Humans are not entirely rational.
if the sales were so high, then howcome Musclepharm needed to sponsor the Cavaliers when the cash and inventory is so low?
Also, why would 3 board members resign at the same time?
Personally, I'm not sure Combat Crunch got what it takes to compete neck on neck with Cliff Bars and Quest at mass retailers.
All Combat Crunch bars look the same....so, you have to spend a little time figuring out what flavor you are buying at the retailer. This level of involvement probably works well for protein powders and possibly for protein bars at specialty retailers, but I'm not sure it works that well for protein bars/snack products at mass retailers...unless you are Gatorade and you make the products very simplistic with limited flavors.
Snickers and M&Ms have different packages all dependent on flavor, ingredients....same thing with Quest. Even Monster Energy and Coca Cola got various different colors of cans, dependent on what flavor you are buying.
Musclepharm just got the packaging for all the proten bars look the same....meaning if you don't like the first flavor, you won't try another one...because in your mind, they all look the same, so they probably all taste the same.
This is how Quest does the packaging for the different flavors, much happier and less depressive packaging than Musclepharm's.
http://mattstevens.me/tag/protein/
The success of the Black Label products are questionable as well to me. The packaging it is not as bright and shiny, and appealing looking as the original Hybrid products....I don't know what it is suppose to symbolise? That investors got burned? The packaging surely looks like char coal to me.
Vega sport appears to have created a unique position in the sports nutrition space, as a market leader of plant based products.
This is not the same type of company as Musclepharm. So imo, Post Holdings acquisition of Dymatize remains to be a more relevant reference in determining the value of Musclepharm to a buyer....even if Musclepharm isn't any profitable company with own manufacturing, spotless reputation and cost effective marketing such as Dymatize.
Vega Sport operates in the plant based protein space. The company has been very successful with only a handful of products and only a handful of distributors. The marketing budget is a whole lot smaller than Musclepharm's as well, as it probably has done most of it's marketing through collaboration with relevant partners such as Lululemon and Whole Foods Market.
I've been watching Vega Sport for a while, and last year I considered entering the Yoga, Organic, West Coast kind of space with my own line....which never materialized though.
Vega Sport is like the Starbucks and Lululemon of the sports nutrition space. It's a very unique company imo.
British Columbia, Canada, Washington State, Oregon and Northern California have fostered many global brands, like Lululemon, Starbucks, Nike, Columbia, Apple, Facebook, Twitter etc....always with some minimalistic and highly focused brand identity, coupled with strong quality attributes.
Vega Sport could be another such brand.
Nature's Sunshine probably looks more undervalued to Wynnefield Capital, since it is still piling up on that one and not on Musclepharm.
http://finance.yahoo.com/q/is?s=NATR+Income+Statement&annual
http://finance.yahoo.com/q/bs?s=NATR+Balance+Sheet&annual
http://finance.yahoo.com/q/cf?s=NATR+Cash+Flow&annual
Could be that Musclepharm's income statement and balance sheet are not particularly attractive to institutional investors. Wynnefield Capital might feel that Musclepharm is facing more problems than some weaker foreign currencies flattening out growth like as in Nature's Sunshine's case...it could be a matter of lacking focus and liquidity, and an inability to keep the inventory at par levels for the various SKUS Musclepharm holds.
My feeling is that Musclepharm might do a whole lot better longer term if it stabilized the business and forgot about the negative effect of dilution from a capital raise for a minute. It looks like it does need capital, and it appears like it needs to focus more on what it got, by fixing the home base, before it plans for more expansion in product lines, and foreign markets.
Nature's Sunshine had some foreign currency issues and some $26 million Capex, that lowered cash holding...but it still holds plenty cash to cover for unanticipated expenses, it's revenues are still decent, and the inventory levels are kept rather constant.
Musclepharm's inventory levels have kept on going down, until it probably reached such a low point that made it difficult keeping it at par, and filling in orders. An inventory is the same as a bank account, if you take more out than what you put in, eventually it will empty out, and you might be broke....unless somebody gives you a hand. My feeling is that Musclepharm cannot do without a hand, digging itself out of this hole, turning around everything just like that. My feeling of how things are going might be wrong though, time will tell what's up with Musclepharm.
$30 million pocket change for this guy....Interesting that he is Austrian like Arnold Schwarzenegger, and came from nothing and made it big abroad.
http://touch.sun-sentinel.com/#section/-1/article/p2p-82913200/
His new sports bar is by far the fanciest and largest in all of Miami area, I have a feeling it will fail though with plus $16 hamburgers. Plus $16 hamburgers is a California and NYC thing, it probably won't work here.
Some billionaire from Toronto just spent $30 million on the largest Pegasus statue in the World, that quite inappropriately is stepping on a Dragon for the Gulfstream Park Racetrack and Casino in Hallandale Beach, Florida.
I wonder what Chinese woman hurt this guy that badly up in Toronto for him pulling off this shit? The Dragon is sacred in China, it represents the Chinese culture, so you don't go stepping on it.
The guy from Toronto owns the Santa Anita Racetrack in California as well....he might be the guy Musclepharm is looking for, if he is willing to spend $30 million on a statue for a Casino, he is willing to invest in marketing.