How Did Manscaped Lose $300,000,000 In 1 Year?

Manscaped lost $315 million in 2021, and most people think that's a bad thing. In 2020, they lost $54.2 million. So between 2020 and 2021, they increased their losses by something like $260 million. So what's going on here? How is this actually possible? How did an apparently massively successful brand lose over $300 million in one year? So if you look at Manscaped's profit and loss statement, you'll see between 2020 and 2021, their marketing and selling expenses almost tripled from $103 million to $267 million. But the thing is, their sales went up by less than 50%. So they tripled their marketing budget, but their sales went up something like 40%, which doesn't seem to make that much sense. Now, in 2021, you may or may not know, but iOS 14, essentially an Apple update, crushed a lot of the ability to track purchase conversion. Versions in early 2021. And now there's modeling and all of these other third-party software and services, and you should be able to have decently accurate tracking even though some of it will be modeled. But in 2021, around February to May, for most companies this was a pretty big deal and they didn't have very good tracking. Another thing is in general it's getting more expensive to acquire customers as the D2C or the e-commerce space gets a bit more competitive. But that again is not necessarily a bad thing. So let me explain my thinking behind what happened here and why I actually think this is probably not that bad or big of a deal as it might sound. So on paper, sure, it might look like Manscaped is in the hole and has a long road to recovery, but you could also flip this scenario and look at it from a business standpoint. Now, Manscaped might have actually planned this loss for their long-term gain. Companies the size of Manscaped are not typically looking to scale a positive upfront ROAS. So that is the return on ad spend that you get within a short time frame. So if I I spend $5 on ads today and I get a purchase for $25, that would be a 5x ROAS, and that's what people are typically familiar with. But brands like Manscaped are typically looking at their LTV ROAS, or just their LTV of their customers in general. So if I know that my customers spend $25 every 4 months, over the course of the year spending $75, and over the course of several years potentially spending up to $750, that $5 that I spent to get that $25 purchase, while that might be a 5x ROAS, if they spend $750 over the course of 10 years, then I'm actually getting 150x ROAS, I believe, 150x return off of that purchase. So the first thing that they could be looking at is their LTV. Now, Manscaped has poured budget into essentially being the biggest social presence for men's— whatever type of grooming you want to describe that as— men's downstairs grooming on the market. And in 2021, maybe less so now, but in 2021 they dominated almost every guy's social media pages for most of the year. So the first potential option is that Manscaped was looking at their multi-year return off of customers and said, eff it, let's spend $300 mil and just start getting that customer or that market share right now. The other potential route that they're looking at is the value of the increase in their equity in the business from doing so. Let me explain. Let's say Manscaped in 2021 was worth $300 million. Again, these are hypothetical numbers, and this would have been a hypothetical play by the Manscaped operators as well. But let's say that they were worth $300 million in 2020. Now, spending that $300 million in 2021 likely beat out a lot of their competitors, meaning their competitors weren't able to afford advertising, or all of the customers that were interested in a product like this were buying and purchasing through Manscaped. If they effectively captured a large enough percentage of that market— and again, I don't I don't know how big the men's downstairs grooming market actually is, but that might actually increase their brand equity from, let's say, $300 million to $1 billion. So let's say Manscaped is now a billion-dollar brand. Even though they lost $300 million, investors are looking at it and going, okay, you've got this large customer base, this is an incredible product, this giant team, and everybody knows who you are. This business could be worth $1 billion if we made it a bit more profitable and spent less on marketing, yada yada. So although they lost $350 million $1 billion in 2021, they increased their brand equity or their brand valuation from $300 million to $1 billion, which is $700 million in profit. Now, again, this is hypothetical. It's an example, but it's a strategy that big companies take and look at and do on purpose. And most people go, hang on a second, that doesn't make any sense. They lost so much money, but they're looking at it from a different angle, essentially. A couple of years ago, I spoke to the original founder of Manscaped before he sold it, and that essentially seemed to be his strategy. And I'm not saying losing money or running an unprofitable business, but he has been building an incubator and launching multiple businesses on a frequent basis now. So he has mastered the art of building a startup or an initial brand, launching it, and then exiting it to somebody else with more money that wants to do something like losing $300 million to potentially bring in extra long-term valuation or long-term gain, if that makes sense. So sure, they may have lost that $315 million, $300 million, but large D2C brands like Manscaped are usually looking to be acquired by major players, those giant companies out there. In return for losing $300 million, they took control of most of the market. You tell me, was this a bad move by Manscaped? Am I completely wrong about my hypothesis as to what happened here? Or is there something else going on at play? And was this actually a good move for them?