The parent company of the Ultimate Fighting Championship (UFC) just went public. Endeavor stock rose 25% in its first week following April 29. Shares debuted around $24 and went to $30.
Whether or not they will keep rising - and whether you should buy it - depends on a number of factors.
The pandemic hurt Endeavor Group Holdings Inc. (NYSE: EDR), as its live events were on hold for a year. This actually kept the company from going public back in 2020.
Now, the company is back on its feet swinging, publicly traded, and quite bullish from the inside.
Does that make it a buy, though?
Here's how the Endeavor IPO went down, and if there's a right time to buy Endeavor stock.
What Is Endeavor?
Started in 2009, Endeavor used to be William Morris Endeavor Entertainment.
It's co-founded and run by Ari Emanuel and Patrick Whitesell. Emanuel is the brother of ex-Chicago Mayor Rahm Emanuel.
Emanual and Whitesell together form a dynamic duo that serves both the company's morale and strategic purposes. The former is a fiery, flashy business mogul - so much that he was the inspiration for a character in the HBO TV series Entourage. Whitesell, on the other hand, is viewed as the guy that reins him in and thinks more in strategic terms.
This power duo has led the company to super-fast growth over the last decade.
Today, Endeavor owns more than just UFC, managing all kinds of talent and media in the state of California. It has a host of digital media companies, actors, and musicians under its care.
The company owns the Miss Universe pageant and represents the NFL and NHL.
Of course, Endeavor still has plenty of growth opportunities down the road.
With a diverse portfolio and name recognition, Endeavor has a chance to capture more of the entertainment market over the next several years.
Growth Opportunities for Endeavor
William Morris was bought out by its own subsidiary, Endeavor, and that set the tone for the company's bullish future.
After that, it gobbled up IMG Worldwide, a modeling and sports agency.
The biggest catalyst of all, however, was none other than when Endeavor acquired UFC in 2016.
Fighting on TV has been a subject of debate over the years. Some argued it's too violent for primetime, others said it was character-building.
But neither can argue that the sport doesn't draw eyeballs. And that seems to be why the UFC keeps growing.
In 2018, UFC signed a five-year, $1.5 billion contract with ESPN, which brought the company's value to around $7 billion, according to UFC president Dana White.
And there is still a massive market for mixed martial art that could fuel UFC in the future.
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A great way to tell this is by looking at the number of people jumping on the martial arts bandwagon over the last several years. According to IBISWorld, U.S. martial arts studios are expected to rake in $8.7 billion in 2021. That's double the 2011 number, just under $4 billion.
Endeavor is $20 billion market cap right now. UFC will no doubt push it even further. And with all its other niches, this company has everything it needs to turn into a media powerhouse.
That said, is Endeavor stock a no-brainer?
When to Buy Endeavor Stock
You will often see a massive plummet in a stock's price following an IPO. High-profile institutional investors tend to drive the price way up, and it gets overbought and crushed to an ugly low.
You did not see this with Endeavor. That means Endeavor was likely priced well at its IPO so far. That's a good sign.
And with all the future growth potential in this company and its segments, Endeavor stock does offer some upside to investors.
The major reasons are its leadership and its diverse portfolio. The CEO and chair are a well-balanced team, and they like to aggressively expand their horizons in a controlled manner.
So, even if UFC falls out of popularity a few years from now, the company will probably have something to fall back on.
This is a massive agency with a lot of history - definitely one to own. But right now is even a special time to buy.
With live sports making a comeback and many getting vaccinated, Endeavor stock is likely to see a further pop over the next few months.
Right now, it trades for $29. If you can get it under $35, it's certainly a buy.
That means picking up shares now would be a great thing for your portfolio.
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About the Author
Mike Stenger, Associate Editor for Money Morning at Money Map Press, graduated from the Perdue School of Business at Salisbury University. He has combined his degree in Economics with an interest in emerging technologies by finding where tech and finance overlap. Today, he studies the cybersecurity sector, AI, streaming, and the Cloud.