Dr. Shaquille Rashaun O’Neal, more commonly known as Shaq, has a collection of basketball accolades and accomplishments, from retired jerseys to championships, cementing his image and legacy as an icon and one of the most dominant seven-footer to play the sport. The brand that Dr. O’Neal has created sets him apart from a fellow professional basketball player in a different Insurance Commerical, Chris Paul. General Insurance has a page dedicated to Dr. O’Neal, https://www.thegeneral.com/shaq/, unlike Mr. Paul from State Farm.
Alongside the General, Dr. O’Neal appears in other national commercials such as a playful argument with Tony the Tiger about Dunking or advertising the Ring Home Security devices. It is worth noting that Dr. O’Neal can be traced to three different publicly traded companies- Papa John’s International Inc (NASDAQ: PZZA), Carnival Corp (NYSE: CCL), and Forest Road Acquisition Corp (NYSE: FRX). Yes, personalities such as Elon Musk and Jeff Bezos are utterly different from Dr. O’Neal. The Least Common Denominator among such characters would be their name and the value behind it.
Many qualitative and quantitative metrics are used to find value in the stock market. One such metric is associating personalities with the stock. It is a common practice to highlight if the guest was an early or current investor in a company to provide validity to the speaker or contributor or highlight their expertise. Names like Bill Gates, Cathie Wood, and Chamath Palihapitiya are consistently floated to support, invoke, and attract investors’ attention to a particular new company. Evaluating Dr. O’Neal’s effect on that paradigm within the ecosystem of the three publicly traded companies he is directly related to is interesting.
March 22, 2019, Dr. O’Neal became the brand ambassador and agreed to enter into a marketing agreement with Papa John’s International Inc . Dr. O’Neal is a member of the company’s Board of Directors with no membership on any of the three committees, Audit, Compensation, and Corporate Governance & Nominating. The company selection of Dr. O’Neal is a pivot and a complete refresh from the legacy of its former founder and CEO, Mr. John Schnatter. According to Joseph Pisani and Gary Gerard Hamilton of the Associated Press, “the company hopes O’Neal can repair its image and revive its sales after the company’s founder and namesake, John Schnatter, made racially insensitive remarks” . September 05, 2019, saw the launch of the “Better Day” National Campaign where Papa John’s featured Dr. O’Neal, “making pizzas with Papa John’s team members and engaging Los Angeles residents across the city during deliveries at different locations” . Visible in the commercials is Dr. O’Neal’s character accompanied with a cheerful smile translating comfort, fun, and joy. Consumers were offered the extra-large SHAQ-A-RONI PIZZA on June 29, 2020.
Throughout the different press releases, highlighted is Dr. O’Neal’s investment with Papa Johns. According to the March 2019 release, Dr. O’Neal is said to be an “investor in nine Papa John’s restaurants in the Atlanta, Georgia area” . Much like the General, Papa Johns dedicates a page to Dr. O’Neal, https://www.papajohns.com/shaq/, where Dr. O’Neal shares his story with the company.
Papa John’s International Inc (NASDAQ: PZZA), the stock, has performed well since Dr. O’Neal’s association, where the stock has returned approximately 103%, excluding dividends. If one had invested in Papa John’s International Inc (NASDAQ: PZZA) after learning Dr. O’Neal’s partnership, they would have made their money back in about 811 days.
Carnival Corp (NYSE: CCL) appointed Dr. O’Neal as their CFO, on January 12, 2018, where Dr. O’Neal will help in “lending his fun, larger-than-life personality and playful spirit to inspire America to Choose Fun with Carnival when planning their next vacation, and in their everyday lives” . Not to be mistaken with the title of Chief Financial Officer, Dr. O’Neal serves as the Chief Fun Officer. On October 16, 2019, Carnival released a 13-minute safety video featuring Dr. O’Neal guiding “guests through the safety messages,” while inspiring fun and, more recently, vacationers on the Mardi Gras™ can enjoy sandwiches like The Big Aristotle or Shaq Attack at Big Chicken, Shaq’s Chicken Joint.
Unlike Papa John’s International Inc (NASDAQ: PZZA), Carnival Corp (NYSE: CCL) stock has not performed as well since the association with Dr. O’Neal. Since January 12, 2018, the stock has fallen approximately 56% in value and Dr. O’Neal is not directly responsible for the price performance of the stocks. Broader economic conditions were. Still, it’s worth noting that buying and holding based on name association so far has only returned approximately 47% (103% from PAPA minus the 56% from CCL).
The 2020 pandemic spotlighted Special Purpose Acquisition Companies, blank check companies looking to bring otherwise private enterprises into the public markets circumventing the traditional, rigorous, and demanding Initial Public Offerings process. Bridge Point Capital offers a side-by-side comparison of both approaches revealing that time and transparency as two factors separating SPACs and IPOs. On October 8, 2020, Joe Flint of the Wall Street Journal published that “three former high-ranking Walt Disney Co. executives are teaming up with basketball legend Shaquille O’Neal and one of Martin Luther King Jr. ’s sons to make acquisitions in the media and technology industries” . The SPAC they formed was Forest Road Acquisition Corp (NYSE: FRX), a company that, on February 10, 2021, announced a three-way merger to form The Beachbody Company. Fast forward to June 09, 2020, and The Beachbody Company shared their Investor Presentation Dated June 2021, providing an opportunity to evaluate Dr. O’Neal’s newest stock.
Oh yes, how is Dr. O’Neal related to Forest Road? According to their S-1 Registration Statement published October 08, 2020, Dr. O’Neal serves as “a strategic advisor as of the effective date of the registration statement” . According to The Beachbody Investor Presentation, the company has 3.2 million subscribers and estimates to generate $1.11 billion in total revenue for 2021 and $3.29 billion by 2025. Approximately 75% of revenue generated comes from subscriptions, with a 50%-40% mix between Nutrition & Supplement and Digital Subscriptions, respectively. Between 2018 and 2020, Total Revenue grew from $790 million to $893 million. In 2020, the company sold 27,000 connected devices and estimated that it would sell 398,000 machines by 2025, represented with its MYX Fitness brand. The average quarterly cost for three of their Digital Subscription services, Beachbody on Demand, Open Fit, and MYX Fitness, is approximately $32.67. On May 27, 2021, the SPAC Forest Road Acquisition Corp (NYSE: FRX) shared the Prospectus with The BeachBody Company inviting shareholders to vote in a virtual meeting on June 24, 2021. A successful ballot will validate its merger agreement and change its current identifier on the stock exchange from FRX to BODY.
Since Forest Road Acquisition Corp (NYSE: FRX) began trading on Jan 15, 2021, it has fallen approximately 1%, bringing the final Dr. O’Neal-related stock return total to around 46%. Implied in this result is all Dr. O’Neal related stocks, PZZA, CCL and FRX since Q1 2018.
Excluding Carnival Corp (NYSE: CCL), a stock with mismatched corporate responsibility due to an arbitrary title; Papa John’s International Inc (NASDAQ: PZZA) and Forest Road Acquisition Corp (NYSE: FRX) are two companies where Dr. O’Neal has a direct relationship with the corporate structure. Since Q1 2019, Papa John’s International Inc (NASDAQ: PZZA) and Forest Road Acquisition Corp (NYSE: FRX) have combined to return approximately 102% compared to around 50% from the Standard & Poors 500 Index and about 82% from the NASDAQ Composite.
In an environment where investors can be enamored and attracted to particular investments due to the supporting cast voices, Shaquille O’Neal serves as a barometer away from the daily business media barrage associated with Elon Musk, Cathie Wood, or Chamath Palihapitiya. Dr. O’Neal is famous for being an early investor in Google and Ring Security, but these new ventures, PZZA and FRX, offer a more tangible and direct line to invest with Dr. O’Neal. If anything, I have added FRX to my watchlist. I am interested to see its performance even though the future estimates they provide require mass consumer adoption.
Consider the Total Revenue for Fitness and Recreational Sports Centers, All Establishments, Employer Firms prepared by FRED, Federal Reserve Bank of St. Louis, indexed to 100 starting January 1998. Compared to 1998, the Total Revenue for Fitness and Recreational Sports Centers increased 233.46% in 2019.