Falcon’s Beyond Global, Inc. (FBYD) – PUBLICLY HELD AS A RESULT OF A “BUSINESS COMBINATION” IN OCTOBER ’23, IS OFFERING 18M SHARES – LOTS OF WATER UNDER THE BRIDGE – THE VALUATION IS MATERIALLY LOWER THOUGH THE LONG TERM OPPORTUNITIES REMAIN
CONCLUSION
We have had no personal contact, or even conversation about business plans, since joining them for their NASDAQ listing ceremony about a year ago. We are not affiliated with a broker-dealer so are not part of the underwriting group, and have not been privy to their current Investment Presentation. Our presentation here is therefore strictly arms length. In essence, they are good people and we are rooting for them.
In summary, the management of FBYD is the same that impressed us two years ago. We don’t believe they have lost their creativity, work ethic, professional skill, or enthusiasm for the many large scale opportunities that present themselves. Their creative platform is unique and we believe that FBYD will be “heard from”.
We encourage interested readers to refer to our report from August ’22, the link provided below, and other reports can be accessed using the SEARCH function on our Home Page. In particular, check out the videos. We also provide below a link to the Investor Presentation, dated November, 2024, from Falcon’s website.
THE BACKGROUND
We wrote at length a couple of years ago about Falcon’s Beyond Global, Inc., a creative/hospitality company with world class management that had (and has) a dynamic business plan. The lion’s share of the projects that were in the backlog for FBYD in ’23 remain in place, with the exception of their joint venture with Melia’ Hotels, which is on hold for the time being. Our purpose here is to encourage a fresh look, especially since the current valuation of the Company is materially less than eighteen months ago. Below, we will very briefly update you on the major developments, all of which are described at length in the current S-1 registration statement, with a link provided just below. We will provide you with the pro forma capitalization after the current offering. At the end of this summary, we provide a link to the most informative of the reports we wrote back in ’23.
https://seekingalpha.com/filing/9455744
Falcon’s considers itself a next-generation experiential entertainment company that offers a fully integrated service, from master planning immersive experiences to designing, sourcing, and installing rides to content development and optimization. Rather than relying on external partners, Falcon’s consolidates all of these capabilities on one platform, providing solutions previously available only from companies with vast in-house resources. This allows Falcon’s to perform large scale projects with greater creative control and operational efficiency, offering a unique, turnkey experience.
FBYD has three divisions:
Falcon Creative Group (FCG), which creates master plans, designs attractions and experiential immersive entertainment experiences. FCG is a master planner for QIC’s huge entertainment district in Saudi Arabia, where QIC plans to spend (apparently) in excess of a trillion dollars over twenty years. QIC has invested $30M into the FCG division of FBYD, resulting in 25% ownership of that division. Another important venture is in China, where FBYD is a 50% shareholder in Karnival, which is developing LBE (Location Based Entertainment) experiences in China, the first of which is in Hong Kong..
Falcon’s Beyond Destinations (FBD) develops a range of entertainment experiences using both Falcon’s owned and third-party licensed intellectual property, spanning entertainment, dining and retail. It is the joint venture with Melia’ Hotels, within this segment, that has stumbled, and we consider is on “hold”, since the new theme park in Punta Cana, DR, closed after only about one year of operation.
Falcons Beyond Brands (FBB) endeavors to bring brands and intellectual property to life through animation, movies, licensing and merchandising, gaming, as well as ride and technology sales.
INTELLECTUAL PROPERTY AND RELATIONSHIPS STILL IN PLACE
FBYD’s broad strategy is to enter “asset light” (relative to FBYD’s investment) relationships, aligning with Falcon’s “Big Experience, Small Footprint” themed entertainment expertise. They partner with developers who have existing commercial properties, established infrastructure and real estate management capabilities. This approach is being used for both Falcon’s owned IP and for third part brands to which the Company has rights. Proprietary intellectual property today includes The Hidden Realms of Katmandu, Cadim and the Monster Wave, Vquarium, ResO, and Curiosity Playground.
Major Projects Still in Place
- QIC, a corporation wholly owned by Saudi Arabia’s Public Investment Fund, has engaged Falcon’s Creative Group to provide services for Qiddiya, one of a series of large-scale projects in Saudi Arabia. Qiddiya is planned to be 367 square kilometers (about 60 by 60 kilometers, 36 by 36 miles, very large), with theme parks, sports arenas, academies for sports and the arts, concert and entertainment venues, racetracks, adventure activities alongside nature and environmental experiences. Since 2018, FCG has led the design of 26 different entertainment assets in Qiddiya, including the now-completed master plan for its water theme park (the country’s first and largest). QIC has invested $30M into Falcon’ Creative Group (for a 25% stake), and has granted $85M in contracts so far.
- In January, 2023, a license agreement was signed allowing for use of certain brands featured on PBS Kids. FBYD seeks to bring Xavier Riddle and the Secret Museum,, Dinosaur Train, Odd Squad, and Wild Krafts into the physical realm through interactive environments.
- In January, 2024, a license was signed with Hershey, allowing for development of Hershey-branded experiences featuring Hershey’s IP, such as Hershey’s, Reese’s, Jolly Rancher and Twizzler, both internationally and in the USA.
- In January, 2024, a letter of intent was signed with Tanseisha, a Tokyo based designer and creator of commercial and cultural facilities, to bring popular Japanese anime and manga characters to life through LBE, games, movies and more.
- FBYD is continuing to work with Raging Power Limited, a subsidiary of K11 Group, which is a subsidiary of Hong Kong publicly traded New World Development Company, The first project is a themed virtual ocean adventure attraction, the first of which to open in 2025 at the new 11 SKIES complex adjacent to Hong Kong Airport.
- As referenced above, the joint venture with Melia’ Hotels appears to be in a holding pattern, as a result of the failure of the Katmandu Park in Punta Cana, opened in March, 2023, closed a year later. While the joint venture continues to own a hotel and theme park in Mallorca, the hotel in Punta Cana, and a hotel in Tenarife, Spain, the next step is uncertain.
- Offsetting the just mentioned uncertainty: On November 19, 2024, the Company issued a joint press release with Infinite Acquisitions, a major shareholder of the Company, announcing that Infinite Acquisitions has entered into a nonbinding letter of intent with Oceaneering International, Inc. (“OII”) for Infinite Acquisitions to acquire Oceaneering Entertainment Systems (“OES”) from OII through an acquisition of assets, and announcing that the Company entered into a nonbinding letter of intent for the Company to operate OES. OES, a developer of complex ride and show systems for theme parks, has collaborated with the Company on themed entertainment projects globally for more than two decades. If the transactions proceed, Infinite Acquisitions, as the owner of OES, would tap the Company’s expertise to operate OES, including its development and support of trackless ride vehicles, flying theaters and beyond. Falcon’s Beyond would seek to employ key OES staff in operating OES.
Prior to the pending sale of 18M Class A common shares, as of January 21, 2025, the total number of shares of Class A Common Stock outstanding was 37,210,177, including 1,000,000 earnout shares denominated as Class A Common Stock; the total number of shares of Class B Common Stock outstanding was 83,815,937, including 39,000,000 earnout shares denominated as Class B Common Stock; and the total number of Warrants outstanding was 5,177,089. There will therefore by about 55M A shares and 39M B shares outstanding, plus 39M potential earnout shares. Fully diluted therefore, with B shares, earnout shares, and warrants, there will be about 146M shares. At the current price in the mid 5s, the equity value is therefore about $800M. We have not seen the Investment Presentation, so we cannot opine on the valuation relative to projected earnings or cash flow, but the valuation, including the earnout shares is materially less than two years ago.
CONCLUSION – same as above
We have had no personal contact, or even conversation about business plans, since joining them for their NASDAQ listing ceremony about a year ago. We are no longer brokers so are not part of the underwriting group, and have not been privy to the current Investment Presentation. Our presentation here is therefore strictly arms length. In essence, they are good people and we are rooting for them.
In summary, the management of FBYD is the same that impressed us two years ago. We don’t believe they have lost their creativity, work ethic, professional skill, or enthusiasm for the many large scale opportunities that present themselves. Their creative platform is unique and we believe that FBYD will be “heard from”.
We encourage interested readers to refer to our report from August ’22, the link provided below, and other reports can be accessed using the SEARCH function on our Home Page. In particular, check out the videos. We also provide below a link to the Investor Presentation, dated November, 2024, from Falcon’s website.
Falcon’s Investor Presentation – November, 2024
Enjoy!
Roger Lipton
Roger’s Report dated August, 2022