• The red-hot market for non-fungible tokens, or NFTs, has piqued interest in Playboy as it monetizes its vast collection of nude centerfolds and artwork.
• Playboy, which went private in 2011 amid declining ad sales from its eponymous nude magazine, rejoined the public markets in February via a SPAC.
• Playboy and Nifty Gateway, a platform for the sale and purchase of NFTs, will work together to create original artwork based on the magazine's art.
• Playboy's stock is up 83% this month alone and 173% since the end of February.

These days, announcing a new investment in a legacy media business is enough to draw a raised eyebrow.

That is, of course, unless the company is reinvented nude magazine publisher Playboy — now PLBY Group — whose stock has surged more than 80% this month due in large part to excitement over how it can take advantage of the hot NFT market.

And Playboy certainly has unique offerings.

"Look, we have an unbelievable archive, 68 years. It is the 5,000 pieces of art we have, it's covers, it's photography. It is so deep and rich in what's in there," CEO Ben Kohn said on the company's earnings call last month.

Playboy, which went private in 2011 amid declining ad sales from its eponymous nude magazine, rejoined the public markets in February with a management laser-focused on modernizing a company once known for its leading market share of pubescent closets.

The shift away from magazine publishing and toward a brand centered on lifestyle and sexual wellness is encapsulated in two recent business deals.

The first is Playboy's $25 million purchase of TLA Acquisition Corp, a firm that sells sex toys, vibrators and lingerie through a subsidiary chain called Lovers.

But the second, a partnership with online NFT marketplace Nifty Gateway, is what has the company's investors most excited.

NFTs, or non-fungible tokens, are a type of digital asset that results from using the technology that powers cryptocurrency to make a unique token with its own identification that cannot be replicated.

In practice, they act as a sort-of deed proving ownership for original editions of digital artifacts, including works of art, sports collectibles or music albums.

In the case of Playboy and Nifty Gateway, the two will work together to create original artwork and focus on "the curation and sales of Playboy's iconic art collection in NFT form."

In addition to its famed collection of nudes, Playboy's vaults contain art pieces and editorials, including interviews with former President Jimmy Carter and Black political activists Malcolm X and Martin Luther King Jr.

Rachel Webber, Playboy's chief brand officer, hinted at the potential value of its vast archive earlier in April when the partnership was announced.

"We wholeheartedly believe in the future of a blockchain- and crypto-powered art world that ensures artist and collector protection, ongoing artist compensation, and the democratization of distribution and collecting," she said in the release.

It's no small secret that the nation's magazines, newspapers and plastic-wrapped porn have seen their collective profits evaporate over the past 20 years. The advertising dollars that once kept many a newsroom afloat have instead been gobbled up by the likes of Facebook and Google.

In a new report this month, eMarketer said that Amazon's share of the U.S. digital ad market was more than 10% for the first time in 2020. Google's share was 28.9% of the U.S. digital ad market in 2020, and Facebook's was 25.2%, according to eMarketer.

But as the globe shifted the way it consumed content to URL, so too did newspapers and magazines change the way they sold their stories.

Mobile apps, website design, digital paywalls, and search engine optimization became as critical to a newsroom's bottom line as the content itself and — for better or worse — carried newspapers and magazines into the digital era.

Now, the advent of the NFT promises to do the same. And perhaps no company has benefited as quickly or as dramatically from the NFT market as Playboy.

The first project between Nifty Gateway and Playboy is slated to be original works from Boston-based collage artist Slimesunday in collaboration with the magazine's editorial curators. In June, Playboy and Nifty expect to launch a Pride-themed curation with digital artist Blake Kathryn.

Though the idea of displaying an original and exclusive edition of a Playboy centerfold in the living room may not appeal to all households, the ability to own some of the magazine's most-famous covers as art investment may be more enticing.

"Assets gather their value by their scarcity, which also is balanced by supply and demand. If there is only one Marilyn Monroe cover of Playboy, it would be a valuable NFT," said Jon Najarian, Market Rebellion co-founder and a CNBC contributor.

Najarian isn't alone in his excitement over the new market. Playboy's stock is up 83% this month alone and 173% since the end of February.

The stock's run-up is likely thanks to a combination of the announced partnership with Nifty as well as management's focus on modernizing the brand.

During 2020, Playboy brought in $148 million in sales, representing an 89% increase in revenue from 2019 despite the Covid-19 pandemic. Its fourth-quarter sales of $46 million were more than double what it brought in the year prior.

Playboy Chief Financial Officer Lance Barton, who spent seven years at Tinder parent Match Group, expects Playboy to do $200 million in sales this year as its direct-to-consumer businesses in sexual wellness, style and apparel accelerate.

Kohn, the CEO, said in March's earnings call that licensing Playboy's intellectual and artistic property in the NFT space could be "huge" in the long term.

"And so, I think it's going to be a combination of leveraging the archives and the art collection, commissioning and working with emerging artists today for new works," he said at the time. "A combination thereof and then those great talent relationships we have with influencers and with a whole host of creative community where we can also create NFTs in other digital collectibles with them."

Though Playboy may be new to the NFT market, Wall Street has for months been abuzz with several high-profile sales.

In February, an animated GIF of Nyan Cat — a 2011 meme of a flying Pop-Tart cat — sold for more than $500,000. Just a few weeks later, musician Grimes sold some of her digital work on Nifty Gateway for more than $6 million.

The token market isn't restricted to the traditional art mediums, either. Twitter's founder, Jack Dorsey, for example, sold his first tweet as an NFT for over $2.9 million.

In explaining the value of an NFT, Najarian offered parallels to both the film industry and the fine art world.

More than a decade ago, investors began to reassess the value of the content and franchises owned by some of the globe's largest media companies, such as Paramount, Sony and Fox, he explained.

But initial fears that internet piracy could undermine the financial potency of Paramount, Sony or Fox gave way to a new era of content competition now dominated by Netflix, Amazon and Disney — now three of the most valuable companies on the planet.

"You can take a picture of the Mona Lisa," Najarian said, "but it isn't the same as owning it."