Catching a major social trend as it develops is at the heart of great investing. Although gaming has been around for a while, it continues to develop and grow and still has tremendous potential.
A good illustration is the recent IPO of Roblox (RBLX) which IPO'ed at $45 and is currently trading around $69. Anyone with children is probably more familiar than they would like with this site which is the most popular gaming site for children. The gaming business is going to continue to grow for many years, so what better way to invest in it than a company that profits from gaming fans?
Enthusiastic Gaming (ENGMF) is building the world's largest media platform of communities for gamers and esports fans. It reaches over 300 million gaming enthusiasts on a monthly basis and one in every two Gen Z and millennials in the United States in a given month.
It is already the largest gaming platform in North America and the United Kingdom. The company's business is comprised of four main pillars: Esports, Content, Talent, and Entertainment. Enthusiast Gaming's esports division, Luminosity Gaming, is a leading global esports franchise that consists of seven professional esports teams
The CEO Adrian Taylor Montgomery recently commented, "They're flocking to our video game communities to maintain social connections with friends, to make new friends. They are also consuming more and more hours of content on YouTube and Twitch. Our strategy is to own the video game and esports fan experience from the moment the video game controller is put down, and the fan journey begins. Gaming is not just a hobby but a lifestyle. Gen Zs and millennials spend more time consuming gaming content than any other form of entertainment."
"In fact, gaming is now bigger than the movie and music industries combined. Two-thirds of Gen Z males say that gaming is a core part of who they are. It is how they consume media, how they spend money, and it forms the backbone of their social interactions. So for brands and advertisers looking to connect with this audience, they need a video game strategy. And by virtue of our reach and broad collection of assets, we can offer more touchpoints to the gamer than any other media company," he added.
The demographic trend and opportunity here is obvious, but the issue is positioning in the stock.
I believe ENGMF is on the cusp of a major move, but currently, it is still trading on the Over the Counter (OTC) exchange that limits buyers, impairs volume, and has a number of other drawbacks. What will make a big difference for the company is full Nasdaq listing. Last night on its conference call, Montgomery commented:
"The company continues to advance its NASDAQ listing application, which we understand is in its final stages, and accordingly plans on filing a Form 40-F Registration Statement with the United States Securities and Exchange Commission in the coming weeks."
Once this listing is complete, it is likely that the market will be able to give ENGMF the valuation it deserves.
I've been holding a position and reduced some of it into the earnings report. My game plan now is to keep trading into weakness and to be in a position for when the Nasdaq listing is eventually granted. It will probably take at least a month or so for Nasdaq to act.
My general strategy with a stock that I think has a bright future like ENGMF isn't to just buy and hold shares. My strategy is to aggressively trade the volatility as it develops. The fact is that I feel confident that the stock will do well over time. It gives me added confidence and allows me to trade bigger positions.
