OnlyFans has sparked a wave of controversy in recent weeks after the popular content platform implemented a ban on explicit pornography, then quickly reversed course and said it will continue to allow amateur porn content.
The decision and reversal were somewhat surprising for investors, content creators and users, sparking several theories as to what’s going on with the company and just how important pornography is to OnlyFans.
Banks To Blame? The official word from OnlyFans is the ban came after banks and payment providers pressured the company.
“The change in policy, we had no choice — the short answer is banks,” OnlyFans CEO Tim Stokely said.
Last year, Visa Inc (NYSE:V) and Mastercard Inc (NYSE:MA) cut off service to popular platform PornHub following a New York Times report about child pornography and nonconsensual content on its platform.
How Important Is Porn? OnlyFans is currently a private company. But even if its financials were public, it’s unlikely the company would provide a breakdown or estimate of how much of its business comes from explicit sexual content, which as NPR said, is "the content it's best known for."
Some traders speculated the potential ban was a hint that OnlyFans is considering an IPO in the near future. In June, Bloomberg reported OnlyFans was seeking to raise private funding at a valuation of more than $1 billion. The anonymous source said the company was hoping to find investors that can help OnlyFans transition to more of a mainstream media platform and reduce its reputation as a pornography hub.
Axios reported an OnlyFans pitch deck from March 2021 indicating the company is projecting gross merchandise value to grow from $2.2 billion in 2020 to $12.5 billion in 2021, while revenue is expected to increase more than five-fold to $2.5 billion by 2022.
Based on the company’s reversal of its porn ban, it’s likely those growth projections would have taken a big hit if porn were removed from the platform.
Tumblr, which was once a popular platform for adult content, banned explicit images in 2018. Yahoo purchased Tumblr for $1.1 billion in 2013, but the platform reportedly sold for just $3 million in 2019 following the adult content ban.
Benzinga’s Take: As far as an IPO goes, it remains to be seen whether or not OnlyFans could potentially go public at some point without the explicit content ban.
Earlier this year, Playboy Group Inc (NASDAQ:PLBY) went public in a $381 million SPAC merger. Playboy has been winding down its adult media business for years and reported about 95% of the company’s revenue now comes from sexual wellness products and apparel.