Ryan Reynolds: “Deadpool” actor, super investor
If you know Ryan Reynolds, you probably know him best for playing the potty Marvel superhero in dead Pool – or the most rated PG Detective Pikachu. But did you know that Ryan Reynolds is also a hell of an investor?
That is true.
Ryan Reynolds’ net worth is starting to be high …
In 2018, CelebrityNetWorth.com placed Reynold’s net worth at $ 75 million, mostly accrued from his Hollywood paychecks. But not content with the stupid change, in February of that year, Reynolds announced an as yet undisclosed sum to acquire a “significant” minority stake in premium liquor maker Aviation Gin.
We don’t know exactly how much he paid, but it’s a safe bet that he got a good deal.
… and fly higher
As CNBC reported last month, Reynolds and its partners have agreed to sell Aviation Gin and its parent company, Davos Brands LLC, to the beverage giant. Diageo (NYSE: DEO). The total purchase price stands at $ 610 million, split into an upfront payment of $ 335 million, and up to $ 275 million more than Diageo promises to pay as “financial gains” over the course. over the next 10 years, assuming Aviation Gin performs as intended.
Now, because Reynolds’ initial investment in Aviation Gin was never disclosed, and because we also don’t know what percentage of Aviation Gin he acquired for that investment, it’s impossible to say exactly how much. of the $ 610 million will go to Reynolds. poached. But even if he owned as little as 10% of the company (for example), $ 610 million divided by 10 would still be a lot of money – certainly more than the $ 2 million he was paid for. dead Pool.
And Reynolds didn’t stop there.
From premium gin to plebeian telephone service
Even before the announcement of the sale of Aviation Gin – perhaps even before negotiations began – Reynolds was already working on a second major investment, and this one was heading towards a whole different direction. In November of last year, Reynolds revealed that he had bought a large stake (apparently over 25%) in discount prepaid mobile phone service provider Mint Mobile.
Even Reynolds admitted that his move into wireless telephony is a bit “unconventional”. So why switch from premium gin to prepaid cellular service?
As Reynolds said in the company’s announcement at the time, “the average American pays $ 65 a month” for “most essential” phone service. But relying on the cellular network of T-Mobile United States (NASDAQ: TMUS), and T-Mobile’s infrastructure to carry Mint’s service, Mint Mobile is able to provide “premium wireless” service to its customers for as little as $ 15 per month.
Such a low rate could help Mint steal market share from budget-conscious consumers and get too big bigger rivals such as AT&T, Verizon, and T-Mobile itself. If this is how it goes, Mint could become Reynolds’ next winning investment.
What investors can learn from Ryan Reynolds
Of course, not everyone can make these kinds of investments. After all, Aviation and Mint were private companies, and few mainstream investors have access to these kinds of opportunities. In addition, Reynolds is able to leverage the star power of its name to increase the value of the brands in which it invests. Aviation, for example, experienced more than 100% sales growth in the year following its takeover by Reynolds.
Almost certainly, part of that growth has come from consumers who were intrigued by Reynolds’ involvement in the project and willing to buy a bottle to see what it was.
But even so, I think there is lessons investors can learn of Reynolds investments. For example: what if a consumer does not buy a second bottle? What if instead of a bottle of Aviation, they tried the next novelty alcohol instead, and the 100% sales growth that Aviation experienced last year started to slow?
Consumers can be inconstant with their discretionary spending, after all. New brands are coming in, falling out of favor and going bankrupt all the time. And that’s why I think Reynolds made a smart choice by switching from high-priced alcohol to low-cost prepaid cell service with his second investment. Assuming Mint provides even just adequate service, the price of $ 15 per month should be enough to keep consumers coming back, although The advertisement this low price helps to attract new consumers and to develop Mint Mobile’s business, revenues and profits.
In the long run, I suspect a cellular service company with repeat customers and recurring income will work even better for Reynolds than one that relies on novelty and one-off customers. This is how it works in the world of cinema, after all (see dead Pool, Deadpool 2 – and coming next year, Deadpool 3).
If I were to bet this is how I think it will work with Mint Mobile as well.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Questioning an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.