TL;DR - What You Need To Know
The Ultimate Fighting Championship (UFC) inked a landmark sponsorship deal with Anheuser-Busch InBev (NYSE: BUD) and its Bud Light brand, marking its most lucrative partnership yet. This new multiyear global contract kicks off in January and eclipses the previous $175 million agreement with Crypto.com. Bud Light will become a prominent feature in UFC's live events across the United States, making its presence felt in broadcasts, arenas, and even during fight-week activities.
This sponsorship move is strategic for Anheuser-Busch. The company aims to rejuvenate its Bud Light brand, which has suffered from declining sales following a boycott. Bud Light faced public uproar due to a controversial marketing decision involving transgender social media personality Dylan Mulvaney.
The shift in UFC’s beer sponsorship comes after a six-year relationship with Modelo, handled by Constellation Brands, Inc. (NYSE: STZ). It’s worth noting that UFC recently underwent a $21 billion merger, becoming part of TKO Group Holdings Inc. The organization has also expanded its reach globally, with plans to host its first event in Saudi Arabia in March.
Anheuser-Busch's sponsorship isn't new; the brewer was UFC’s original beer sponsor starting in 2008. This latest deal signals a high-stakes reunion for both entities, aiming for mutual growth and wider market capture.
Why This Is Important for Retail Investors
Investment Diversification Opportunity: For retail investors, this new sponsorship deal signals the health and expansion of the UFC and Anheuser-Busch InBev, potentially making both more attractive investment options. Endeavor Group Holdings Inc (NYSE: EDR) spinoff TKO Group Holdings Inc (NYSE: TKO) owns the UFC. Diversification into companies involved in sports sponsorship could add resilience to an investment portfolio.
Market Sentiment Indicator: A lucrative deal like this often bolsters market sentiment around the involved companies. Retail investors could leverage this positive sentiment for timed entries or exits in both UFC owner Endeavor's and Anheuser-Busch's stocks.
Brand Synergy Effects: The partnership aims to revitalize the Bud Light brand, which has been struggling. If successful, this could lead to improved earnings for Anheuser-Busch, impacting its stock favorably. Retail investors tracking consumer goods sectors would do well to monitor these developments.
Global Expansion: UFC's global reach, including new markets like Saudi Arabia, could translate into increased revenue streams. This global expansion could bode well for investors looking for companies with international growth prospects.
Historical Relationship: The renewal of a partnership that began in 2008 offers a proven track record of mutual benefit. Retail investors often seek companies with stable, long-term relationships as they can be less risky and offer more predictable returns.
How Can You Use This Information?
Here are some of the investing ideas that can be explored using this information:
Value Investing
Anheuser-Busch InBev, with its long history and established brands, is often considered a value stock. The new sponsorship deal could be a catalyst for turning around the struggling Bud Light brand, potentially increasing the company's intrinsic value. Retail investors might consider this an opportune time to invest, especially if the stock is currently undervalued.
Growth Investing
The UFC has shown consistent growth, both in popularity and market reach. Its recent $21 billion merger and global expansion plans signal strong future growth potential. Investors with a focus on growth may consider buying shares in the newly formed TKO Group Holdings Inc.
Momentum Investing
If the announcement of the sponsorship deal positively impacts stock prices for either company, momentum investors might jump on board to capitalize on short-term gains. They would aim to ride the wave of positive market sentiment.
Dividend Investing
Anheuser-Busch InBev is known for its consistent dividend payouts. If the Bud Light sponsorship boosts sales and, subsequently, company profits, this could secure or even increase dividend payments, making the stock more appealing to income-focused investors.
Sector Rotation
Retail investors may look at this deal as a sign to pivot into consumer discretionary or even sports entertainment sectors. These sectors may benefit from increased consumer spending, as economies recover and live events return to full capacity.
Event-Driven Strategy
Both companies are likely to see significant media coverage around the UFC events, which could drive short-term stock price movements. Investors could implement an event-driven strategy, timing their investments around these high-visibility events.
Thematic Investing
Those who believe in the long-term growth of sports sponsorship and live events as industries could consider a thematic investment approach, selecting a basket of stocks that stand to benefit from trends accelerated by such high-profile sponsorship deals.
By examining the sponsorship deal through these various investment lenses, retail investors can identify multiple strategies to potentially capitalize on the evolving situation.
Read What Others Are Saying
Bloomberg (UFC Signs Its Biggest-Ever Sponsorship Deal With Anheuser-Busch)
CNBC (Anheuser-Busch and UFC strike multiyear partnership, as brewer tries to turn around Bud Light sales)
AB InBev (UFC®, Anheuser-Busch and AB InBev Announce Multiyear Partnership)
What you should read next:
Investing with Insight
Knowing where to invest is not easy. Bullish and bearish sentiment is always vying for control, and investors like you can very quickly become overwhelmed.
And yet, no matter what the wider stock market is doing, there are always little-known gems to uncover.
One potential growth stock flying under the radar is a dynamic company operating at the forefront of the entertainment industry. This business is diverse and multifaceted and led by industry veterans with extensive experience in entertainment and investment.
This high-potential US stock is targeting India’s tech-hungry 1.4 billion people.
Internet and social media adoption in India is surging, and the country has the LARGEST youth population worldwide. Over 650M people are under 25 years old, and 850M are under 35 years old.
With rising economic and educational prospects, the country is a hotbed for digital engagement.
Some highlights you’ll want to know include:
This is one of the fastest-growing creator-media companies in India and the United States.
This company reaches 1 billion global consumers every month.
India was the second-fastest-growing market in the influencer marketing space in 2022.
Global influencer marketing spend is expected to reach $34 billion in 2023.
This company has posted nine consecutive quarters of YoY growth, representing a 33% CAGR using its repeatable content strategy.
This impressive small-cap has just appointed a former TikTok Country manager as its India Group CEO.
Finally, this stock is analyst-backed with a potential 114% upside from the analyst initiation date.
If you're intrigued by this stock’s promising prospects, why not take a closer look?
