Unlocking Hidden Value at MODG: Why the Spin-Off Could Ignite a 95% Upside

The stock of Topgolf Callaway Brands Corp (MODG) has been a rollercoaster ride for investors over the past three years, plummeting 58% from its 52-week high of $16.89. Yet beneath the volatility lies a compelling opportunity. A strategic restructuring—most notably the planned spin-off of Topgolf into a standalone company—could unlock hidden value, driving the stock toward a potential 95% upside. Here's why investors should pay attention now.

The Case for the Spin-Off: Separating Growth from Underperformance

MODG's recent moves signal a clear shift toward prioritizing its most valuable assets. The decision to spin off Topgolf by late 2025 marks a pivotal moment. By splitting into two entities—one focused on golf equipment (Callaway) and the other on entertainment (Topgolf)—the company aims to streamline operations and unlock mispriced assets.

This separation addresses a key flaw in MODG's current structure: the drag of underperforming segments like its Jack Wolfskin outdoor apparel brand, which was divested to ANTA Sports in June 2025. With non-core assets shed, investors can now value each business independently, potentially applying higher EBITDA multiples to Topgolf's high-margin entertainment operations and Callaway's premium golf gear.

Catalysts for Value Creation

1. Improved EBITDA Multiples Post-Spin-Off
   Analysts estimate that Topgolf's standalone valuation could command a higher multiple due to its recurring revenue model and strong brand equity. In Q1 2025, MODG reported consolidated net revenue of $1.092 billion, exceeding expectations. While Topgolf's segment operating income dipped 12% due to competitive pressures, its adjusted EBITDA and cash flow outperformed guidance. Once separated, Topgolf's earnings could attract investors seeking exposure to experiential entertainment—a sector thriving as post-pandemic consumer spending shifts toward discretionary experiences.

2. Insider Buying Signals Confidence
   The recent purchase of 383,701 shares by Director Adebayo Ogunlesi, valued at $2.5 million, underscores insider confidence in MODG's turnaround. This move contrasts with the stock's 40% decline year-to-date and signals that management believes the restructuring will deliver long-term value.

3. Strategic Growth Initiatives at Topgolf
   Topgolf's value-oriented pricing—such as half-price sessions on weekdays—and pop-culture partnerships (e.g., Marvel's Fantastic Four and Happy Gilmore 2) are driving traffic. New venues in Panama City Beach (opened June 2025) and Parsippany (planned for 2026) further expand its footprint. These moves aim to stabilize revenue amid economic uncertainty, while also positioning the brand as a leader in experiential entertainment.

Risks and Counterpoints

• Economic Sensitivity: Discretionary spending on golf and entertainment could falter if the economy weakens.
• Competitive Pressures: Callaway's premium golf equipment faces intense competition, which may limit margins post-spin-off.

However, Topgolf's pricing strategies and Topgolf's partnerships mitigate these risks by attracting budget-conscious consumers and leveraging pop-culture momentum. Meanwhile, Callaway's brand strength and innovation (e.g., new drivers) provide a stable foundation.

Why the 95% Upside?

At its July 15 closing price of $8.78, MODG trades at a significant discount to its potential post-restructuring value. If Topgolf's EBITDA multiple expands to 12x (vs. the current 8x for the combined entity) and Callaway's multiples improve modestly, the stock could rise to $17 per share—a 95% premium. This aligns with Topgolf's historical highs and the market's appetite for high-margin entertainment stocks.

Investment Thesis: Act Before the Market Catches On

The spin-off's completion by late 2025 is a critical catalyst. Investors should consider:

• Buying now: The stock's recent volatility (a 2.23% dip on July 14) creates a low-risk entry point.
• Monitoring execution: Track Topgolf's Q3 results (post-Marvel campaign) and the spin-off's finalization timeline.
• Long-term hold: The separation could unlock value that persists even if near-term economic headwinds materialize.

Conclusion

MODG's restructuring isn't just about cutting losses—it's a calculated move to free two high-potential businesses from a mispriced conglomerate. With insider confidence, strong cash flow, and strategic initiatives driving Topgolf's growth, the stage is set for a valuation reset. For contrarian investors, this is a rare chance to capitalize on a stock that's been overlooked for too long. Act now, before the market recognizes what's already in motion.