Ultimate Fighting Championship fans know sports nutrition supplement company Musclepharm (
OTCQB: MSLPD,
Stock Forum) like they know Bud Light. The blazing green MP logo is tattooed across the surging sport, on the cage the athletes fight in, on the shorts they wear as they pound each other raw, and the t-shirts they wear coming through the crowd. Some fans of the brand have literally tattooed it on themselves, with such brand devotion being a demographic trend.
Musclepharm is ascendant. But like the sport it has immersed itself in, and the sometimes controversial athletes it has embraced (Michael Vick being a prime example), Musclepharm has taken a while to get ready for prime time.
There’s been lawsuits, trademark infringements, accusations of shady dealing, some bottom scraping financial arrangements. There have been sponsorship deals that were short on dollars and high on equity of a stock the company sometimes seemed reticent to let traders buy. There have been crazy discounts and promotions that drove down prices.
There was even a high profile sacking of an executive after a sponsored fighter accused him on ESPN of
spying for a competitor.
But Musclepharm, somehow, miraculously at times, has prevailed. Its marketing has proved dominant in a crowded nutritional supplements field high on athlete endorsements and nitrous-charged branding initiatives.
Sales are exploding, rising from
$1.0 million in 2009 to $78 million in 2012. Margins are improving as debt is paid down. And large investors are coming in to help the firm settle into a stronger financial base, clearing the way for a brand explosion event, such as distribution deals with big box retail players or even acquisition by bigger fish looking to dominate the vertical.
After a $6 billion common stock offering in March this year, MusclePharm Founder & CEO, Brad Pyatt, stated, "The closing of this financing will increase both our working capital and shareholders' equity. Strengthening our balance sheet at this time is advantageous as we continue to grow our business. Earlier this year we filed a listing application with NASDAQ and we also believe the additional capital may help expedite the up-listing to a National Exchange."
Stock jumped to $8.50 a share, before settling in to the current groove of $4.18.
For long players, this is an interesting situation. The company has a pockmarked track record which will scare off many, and if it fails to hit the NASDAQ, a short drop in price will likely follow as those waiting for that news bail for greener pastures.
But sales, and bettering management, are a good thing, especially in a space that is increasingly growing (sports nutrition is beating all other supplement nutrition areas in sales growth right now, by a comfortable margin), and has yet to hit the mainstream Wal-Mart/Loblaws space where it can really ramp up.
To be sure, jumping into the Musclepharm pool will require a bit of nose holding, and an ability to forgive prior mismanagement. But, you know, there’s a little somethin’ somethin’ to this thing…
You tell us:
Is Musclepharm a heavyweight contender or a choke-out?