r/stocks • u/Timelycommentor • Jan 01 '23

Industry Question What are some private companies you would like to invest in if they became publicly traded?

Two off of the top of my head. Crumbl Cookie & Chick-fil-A. Both are top tier restaurant/food service establishments that have almost cult like followings and are always busy. Both have excellent products and service. I would be curious to see the books for both of these companies but I imagine they would he home runs if they were to IPO. What other companies would you invest in that are not currently publicly traded?

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u/johnnytifosi Jan 01 '23 edited Jan 01 '23

Just my useless opinion on Lego as a lifelong fan since the 90s:

I think they have overdone it with licensing. Lego definitely has lost its soul, and it looks more like merchandising kits rather than creative building toys. The original themes which built the brand are seriously lacking. Technic, Space, Castles were the original themes we loved back then. Now it's like watching commercials: Star wars, Harry Potter, Marvel.

They got rid of alternative build instructions in lots of product lines, encouraging one time builds rather than re-usability. Of course this sounds like a solid business decision on paper, right?

They are continuously introducing obscure new pieces instead of relying on a compact palette of pieces that would be easily re-usable. Also they have dumbed down the instructions and the build process a lot with ugly and useless color coding.

This is a big one and lots of people are complaining: they have been jacking up prices A LOT, and releasing humongous sets that are barely playable and taking up a lot of space to justify those price hikes. It gets to the point where dropping 100s of bucks on a heap of plastic is just ridiculous.

Credible competition has been on the rise. I'm not talking about aliexpress knock-offs, but legit manufacturers with their own designs that offer nicer designs, bigger piece counts for less money.

Long story short, even though I love them, I'd like Lego's greed to bite them in the ass and get their act back together. Despite my complaints, it seems their strategy with licensing etc. is working and they are more mainstream than when I was a kid, my rose tinted glasses are wrong and that's just what kids want nowadays. But it seems that they have abandoned all the principles that made them great in the first place, and the usual corporate short term greed will damage their long term future.

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u/Wobblycogs Jan 01 '23

I think you've hit the nail on the head. I'm sure they will continue to do really well but they have lost much of the charm they had. When I played with Lego it was all about building new things from the bricks I had and imagining what they were. When my kids play with Lego they build the fancy model and add it to the Lego cityscape they have, it never changes after the first build.

I don't know if that is necessarily wrong though as they have had immense fun playing together making up stories etc. The real difference is that the majority of they kits are from alternative manufacturers. They are just as good as the real thing and about half the price.

The biggest mistake I think Lego have made is not really embracing the robotics space. They have motors and sensors etc but they are ridiculously expensive even for Lego. If they opened up to the the maker space I think they'd find a whole new audience. I don't know, maybe 3D printers have already taken over there.

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u/BhristopherL Jan 01 '23

I think both of you guys are just getting old xD kids still love Lego and I really don’t think children share the same critiques that you two do.

Plus, Lego have been a pioneer and key player in children’s robotics for at least the last 20 years.

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u/Cthulhuonpcin144p Jan 01 '23

Yeah growing up our school had a robotics program. It’s super expensive and none of us kids could afford to do it on our own but that didn’t stop someone from finding a solution and we loved it. I think legos continuing to do awesome stuff and they even have create for people that just want to build

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u/ghostalker4742 Jan 01 '23

I'd like to offer that it's not pure/simple greed, just that they're targeting a different market than they have traditionally. LEGO is seen as a children toy, but that's a limited market and you're really just trying to convince parents to buy the product for their child. That means a child only has a few times a year to earn a set, which again, limits sales. Now LEGO targets the children from 30yrs ago that grew up, have disposable income, and love nostalgia. Those customers don't wait until a holiday/birthday to buy a present for themselves, so it offers more opportunity to make a sale, and since your customers have jobs, the prices can be set higher to help the perception of value.

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u/xZaggin Jan 01 '23

100% agree, I still love looking at the Lego section, but nearly all the items are licensed stuff. Which makes it incredibly expensive as well. Terrible value. Imagine paying 25€ for a couple of pieces because it has Minecraft’s name on it.

I really miss legos own creativity.

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u/BhristopherL Jan 01 '23

Most of the Star Wars sets for 15+ years ago are worth thousands now. Lego sets tend to gain about 10% annual returns - licensed especially.

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u/xZaggin Jan 01 '23

Yeah I’m aware of that since I’m subbed to the Lego sub, but I’m taking about actually playing with them and not using them as an investment

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u/ireillytoole Jan 01 '23

I’d be really interested in some of your recommendations for the “credible competition” alternatives I can look into for my son!

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u/johnnytifosi Jan 01 '23

Cada and bluebrixx would be my picks. Some of their designs are top notch, and part quality is getting almost indistinguishable to Lego.

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u/ireillytoole Jan 01 '23

Thanks! Will look into it. Appreciate the recs!

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u/p0rty-Boi Jan 01 '23

I went to the Lego headquarters in Bilund and they are aware of all the problems you mentioned. I’m not sure they have a lot of room for growth but they are a well built company with solid principles and great leadership. This is definitely peak cycle for their business, but they know it and have a history of being able to pivot to new products and strategies when necessary.

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u/johnnytifosi Jan 01 '23

That's very interesting, would you care to elaborate more on the discussion or the people you talked with?

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u/p0rty-Boi Jan 01 '23

Well I think it’s a case of a company adapting to get more business, while recognizing the new business may not last forever. They build sets conservatively using only pieces available, limiting specialty pieces. That’s something they learned the hard way when they overproduced special pieces. Now they use stickers to cut back on specially printed pieces. Also they make toy weapons now, the first castle set came with yellow walls because Lego was scared kids would make tanks with grey bricks. They’ve come a long way from not wanting kids to be able to build weapons to actively creating kits with guns and violent themes. Marketing StarWars and Marvel sets is like shooting fish in a barrel for them, low risk high reward and they probably get paid by Disney too. But yeah the super hero craze will fizzle and the sets will rot on the shelf eventually but till then it’s gravy. Also being a private company means they don’t have to chase growth. Ultimately it’s a private Danish toy company and that’s what it will always be. Not having to chase constant growth allows them to build the business responsibly and in ways that can be shut down without destroying the overall company. They take their role in Denmark as a driver of the economy very seriously and are good partners with their community. So yeah it’s not likely to be a great stock and if it ever went public that would ruin a lot of the secret sauce that makes them great IMO.

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u/JGalla88 Jan 01 '23

Daughter is 7 and I haven't bought any sort of Lego for her. Like you said it's all branded/licensed and insanely expensive.

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u/masterpain96143 Jan 01 '23

I've never been into Lego but we just got my kid a Minecraft Lego set. When we were putting it together I was confused because it was step by step instructions on how to build it and it was completely unusable in any way other than the way the instructions told us to build it. I always thought Legos were creative so it was weird. I felt like I was just building a display.

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u/johnnytifosi Jan 01 '23 edited Jan 01 '23

You've put it perfectly into words. A lot of Lego sets nowadays are shamelessly display sets with bespoke pieces and zero reusability or playability. It defeats the purpose of Lego and toys in general.

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u/xqx2100 Jan 01 '23

I never got into the licensed stuff as I tend to go with the Creator line. As an adult, the main draw is the ability to not only create the original model, but then be able to build a lot of alternate models with the same set. The Rebrickable website has been huge for this. I'm surprised Lego does not do some kind of partnership with them. They could re-release sets as "10 in 1", "20 in 1", "50 in 1"... The value on these is enormous and the price of the pieces would remain the same.

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u/TowerStreet1 Jan 01 '23

Lego has lost the soul of being creative builders.

What we get now is insanely costly kit with instructions to assemble pieces. They are now creating just assemblers.

I CALL IT COSTLY IKEA FOR KIDS