The entertainment industry as a whole has suffered during 2020. Among the worst affected segments within entertainment has been the sports industry, which couldn't cash in on people being stuck at home during the Covid-19 pandemic.
Major League Baseball (MLB) was no exception to this and had been hit by delays and uncertainties associated with players being infected by the the virus. Heightened disinfection measures needed to be implemented across sports facilities and at the locker room level in order to minimize the Coronavirus risk.
Disinfection technology company Applied UV (AUVI, Financial) has taken its first step towards this huge business opportunity by establishing its partnership with an MLB team, the Boston Red Sox.
The Red Sox Partnership
Applied UV has announced in a recent press release that the company is now the official air purification partner of the Boston Red Sox. It will be going ahead and installing its flagship Airocide air quality improvement systems at Fenway Park, the home ballpark of the team, as well as the JetBlue Park located in Fort Myers, Florida.
The Airocide air purifiers are expected to be installed in all player areas, including weight rooms and the locker rooms for both the home team as well as the visiting team. In addition, all luxury suites will also be having air purification systems installed and the company will identify and place them at various critical points of contact in each facility where fans accumulate indoors throughout the course of a game or event.
It is worth highlighting that Fenway Park has a capacity greater than 37,000 people and JetBlue Park has a capacity greater than 10,000. Also, with respect to Fenway Park, over and above the 2 million fans visiting each year, it also has more than 300,000 private tour attendees each year as it is a popular tourist spot.
Moreover, the effect of these installations extends beyond just Red Sox games as Fenway Park also hosts other sporting events related to American football, soccer, ice hockey, Irish hurling and other large-scale events. It is known to host over 500 private events each year.
Looking back
I expressed my positive views with respect to Applied UV in an article published in September 2020, when the company was largely focused on surface disinfection through its SteriLumen technology that was implemented on various furnishing items such as mirrors and drains.
Back then, the company had been supplying its products mainl to large hotel chains like Hyatt (H, Financial) and Marriott (MAR, Financial). The company gradually entered the healthcare industry by supplying its products to hospitals and also bagged big orders in Middle-East hotels, but there was little impact on the stock price.
The same was the case when the management had announced its first intention to acquire the rights to manufacture and sell the Airocide disinfection technology from its distribution partner, Akida Holdings. Back then, the company had gone through with a fundraising round in order to finance this acquisition because the technology clearly had its merits. It was developed by the University of Wisconsin for the purpose of application by NASA and is listed as an FDA Class II Medical device. The technology had been tested by researchers at Texas Tech University, University of Wisconsin and Texas A&M University and was clinically proven and field-tested to eliminate various bacteria, viruses, mold, other airborne pathogenic and non-pathogenic microorganisms, allergens and odors.
Despite the positive announcements, there had been a very limited movement in Applied UV's stock price back in November 2020. Its minimal appreciation especially in the latter half of 2020 was ironic because many other companies associated with anti-viral disinfection had zoomed.
Unlocking value
Applied UV witnessed a big spike in the stock price when the management lived up to its word and closed the Airocide acquisition in February 2021. This led to a huge value unlocking and the stock zoomed to a new high of $35.78 before the profit booking brought it back to levels close to around $10, where it continues to be stable.
I expect the Airocide systems to stay in huge demand in the future, particularly after the U.S. FDA issued guidance that air purifiers like this product may reduce the risk of viral exposure to SARS-CoV-2 by keeping aerosol concentration levels low.
Additionally, I think the Red Sox order should give a big bump to Applied UV's 2021 top-line, and the company could potentially get more orders from the sports industry as well. Overall, I believe that both SteriLumen and Airocide have huge untapped market potential and the stock continues to have a huge upside potential from current levels.
Disclosure: No positions.
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