Adult entertainment platform OnlyFans seems to be outperforming the rest of the tech sector. Its number of creators and subscribers both grew in recent months, according to the company’s CEO Amrapali “Ami” Gan.
“We’re not seeing any slowdown,” Gan told Axios.
OnlyFans launched in 2016, but its popularity exploded during the pandemic, when celebrities and bored average people alike stuck in quarantine started creating their own accounts and pushing content.
But the rise of “sexfluencers,” or content creators who focus on sex and relationships, offers a fun lesson in market dynamics.
The economics of sin
Fictional mobster Tony Soprano once said there were only two businesses that were recession-proof: adult entertainment and “our thing.” Turns out he was right. Recessions push more people into criminal activities, according to researchers at the LSE Centre for Economic Performance. They also boost demand for all forms of adult entertainment, including pornography, alcohol, gambling and tobacco.
The phenomenon is so well-understood that investors and researchers even have a term for it: “sin stocks.” Sin stocks like Anheuser-Busch (BUD) and British American Tobacco (BTI) outperformed the S&P 500 in 2022 by wide margins.
Meanwhile, OnlyFans seems to have avoided much of the pain spreading across the tech sector. The company announced only one minor round of layoffs in 2022, while media giants like Twitter and Netflix lost up to 50% of their workforce.
In fact, OnlyFans is profitable. Since 2020, the platform has delivered at least $500 million in net earnings to its owner, Leonid Radvinsky. Gan says the number of content creators has expanded to 3 million. These “sexfluencers” combine sexual content with traditional online influencer models to generate up to $900,000 a month.
Unfortunately, retail investors are missing out on this entertaining growth story as OnlyFans remains a private company. And that’s not likely to change as Gan says the team is “happy being privately held.” However, there are other ways investors can bet on the adult entertainment sector in 2023.
Read more: UBS says 61% of millionaire collectors allocate up to 30% of their overall portfolio to this exclusive asset class
RCI Hospitality (RICK) operates over 40 strip clubs across the country. CEO Eric Langan said the company was “recession-resistant” and that “business is very, very good and we’re continuing to run record revenues quarter after quarter.”
Nearly half (45%) of the company’s revenue is derived from alcohol sales, which tend to be marked up in strip clubs. Put simply, the company has pricing power in the midst of a recession and record-high inflation.
In the fourth quarter of 2022, the company reported 29.9% growth in revenue and 71.6% growth in net free cash flow. The stock is up 34% over the last year.
Gaming and Leisure Properties Inc. (GLPI) is a specialized real estate investment trust that owns 57 casinos across 17 states. These casino properties are occupied by well-known brands such as Penn Entertainment, Caesars Entertainment, Boyd Gaming Corporation, Casino Queen, Bally’s and Cordish Companies.
All contracts are “triple-net” leases which puts the company in a favorable position. GLPI stock is up 22.76% over the past year. It trades at 21 times earnings per share and offers a 5.6% dividend yield.
If you’d rather not pick individual sin stocks, there’s a fund that makes it easier to bet on this phenomenon. AdvisorShares Vice ETF (VICE) has over $8.5 million in assets under management and holds sin stocks like Heineken, Monarch Casinos and MGP Ingredients.
The stock is up 6% year-to-date.
Drink it up
There’s another vice asset that is growing in popularity among investors: fine wine.
Wineries produce investment-grade products in small quantities, usually a few hundred bottles. That means there’s a scarcity of valuable products in circulation, and availability only goes down as people consume it.
As a real asset, fine wine can also provide diversification to protect your portfolio against the volatile effects of inflation and recession.
As of right now, the S&P 500 is down 24% year to date and down 18% in the past year. Meanwhile, the Liv-ex Fine Wine 1000 has gone up 14.1% and 22%, respectively.
You can invest in wine by purchasing individual bottles — but you’ll need a place to store them properly. Residential wine cellars often cost tens of thousands of dollars. If not stored at the right temperature or humidity, the bottle could be compromised.
That’s one of the reasons why investing in fine wine used to be an option only for the ultra-rich.
But with a new investing platform, you can invest in investment-grade wine too, just like Bill Koch and LeBron James.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
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