B2Digital Inc (OTCMKTS:BTDG): A Post-Vaccine Star in the Making?

With the advent of vaccine-induced herd immunity in the developed world, everything will change as a massive wave of pent-up demand to go places and re-engage with an active life is unleashed. Markets are already beginning to discount that shift as prices get bid back up for many areas of the market that had been on life support for the better part of the past year.

One of the prime areas of market real estate that should shine as we navigate the reopening trade is fitness facilities. And one stock that seems to have potentially been overlooked so far is B2Digital Inc (OTCMKTS:BTDG), a company that has been mostly associated with Mixed Martial Arts PPV as “the development league in the MMA space”.

In the company’s most recent press release, BTDG discussed its overarching revenue model and some basic points about what it anticipates in terms of performance over coming quarters. The story is worth a close look.

First off, the big performance driver isn’t the company’s live MMA ppv events. At least, not directly. The big driver is its gym roll-up strategy under its One More Gym brand, which is a beneficiary of its MMA brand success.

As we see it, the company is now anticipating a monster breakout in growth as this equation begins to gain traction. The result could be 300-500% expansion over the coming year, particularly if we don’t see widespread new lockdowns over coming months and a safe and effective vaccine rolls out without major unforeseen delays in 2021.

Around the Corner

As noted above, markets tend to look around the next corner. Generally speaking, big trends in the market have more to do with what’s going to be happening over coming weeks and months than what’s happening now or what has been going on in the recent past.

That’s why we see B2Digital Inc (OTCMKTS:BTDG) as a bit of an undiscovered gem in the rubble right now – given its growth outlook and how well it fits into a reopening narrative.

To help clarify that narrative, the company recently put out an update for its shareholders on its outlook and the accelerating organic and strategic growth underway in its Gym segment, as well as its performance related to this strategy during the three months ended September 30, 2020, and its expectations for related performance during the current quarter ending December 31, 2020, and beyond.

“Based on the strategy we have in place – and the assumption that we don’t see major new pandemic-related shutdowns that impact the business – we are targeting $4-5 million on the topline over the rolling forward next twelve months,” commented Greg P. Bell, CEO of B2Digital. “This is based on the growth we are seeing now and the continued successful implementation of the company’s roll-up strategy in our Fitness Facility segment, which is the real breadwinner in our broad vision. We are already on pace to more than double the topline on a sequential quarterly basis into year-end.”

According to the release, BTDG saw a 76% jump in Gym revenues on a sequential quarterly basis in its latest quarter. In addition, the company increased overall revenues across segments by 126%, Q/Q. The company also noted that it sees that doubling again this quarter. In addition, the company plans to continue its roll-up strategy in the fitness facility market over the coming twelve months. The company’s objective is to acquire one to two new gym facilities every quarter with our goal to increase these acquisitions as the spread of Covid-19 decreases nationally. Thus far, each acquisition the Company makes in the fitness facility space is believed to represent at least $400K per year in rolling forward next twelve-month revenues based on past historical performance.

The big picture point here is that this strategic process could lead to truly massive year/year growth. As noted, “At this pace, given current metrics and assumptions, including no major return of mandated pandemic-related shutdowns relevant to its current fitness facilities, the Fitness Facility segment could achieve just shy of $4 million in revenues over the rolling forward next twelve months if the company’s acquisition objectives are executed as planned.

Paired with a conservative assumption of $75K – $100K in monthly revenues from its live MMA events, encompassing 3 planned fights a month at current revenue achievement rates per fight, BTDG believes it has the potential to achieve total revenues of at least $4 to $5 million over the rolling forward twelve months.

Positive Feedback Loop?

We would also note that B2Digital Inc (OTCMKTS:BTDG) is positioned for growth on two fronts, with its B2 MMA branding potential also likely to fare much better as the world reopens and people tune back in to live sports.

That branding potency is what fuels the outperformance narrative the company sees in its fitness facility outlook because the narrative centers on active sports competition and brings in customers that are more committed and less likely to let gym memberships lapse, thereby reducing turnover, which is a huge component in successful gyms.

In many ways, BTDG could be a quintessential reopening play if the company is able to execute on its vision and expectations. The vaccine roll-out has already gotten underway, so one might anticipate some good news around the corner for B2.

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