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What Is The NFT Gaming Company?
Roseland, New Jersey-based The NFT Gaming Company (NFTG) was founded to develop proprietary games and related NFT (Non-Fungible Token) technologies to provide unique experiences to game players worldwide.
Management is headed by Chairman and CEO, Vadim Mats, who has been with the firm since 2022 and was previously CFO of DatChat (DATS) and prior to that CFO of Grand Private Equity, a fintech-centric family office.
The company’s primary offering under development is Gaxos, which will seek to bring together gamers, publishers and developers on a platform with the opportunity to earn rewards and ‘participate in other opportunities.’
The platform will initially be built on the Polygon Network (MATIC).
As of June 30, 2022, NFT Gaming has booked a fair market value investment of $2.1 million as of June 30, 2022 from investors.
The firm has not yet booked or received any revenue but will likely market its platform via digital media and online & offline events.
NFT Gaming’s Market & Competition
According to a 2022 market research report by SkyQuest Technology, the global market for NFTs was an estimated $15.7 billion in 2021 and is forecast to reach $122 billion by 2028.
This represents a forecast CAGR of 34.1% from 2022 to 2028.
The main drivers for this expected growth are a rising demand for digital artworks, both visual and audio, growing awareness of the technology among a wider group of consumers and easier access to information and purchasing capabilities.
However, the growth in the market has been notably volatile, with strong growth in the summer of 2021 followed by a sharp drop in interest by the summer of 2022.
Major competitive or other industry participants include:
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Coinbase
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OpenSea
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Larva Labs
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Cloudflare
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Dapper Labs
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Binance
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Skill Labs
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Others
NFT Gaming’s IPO Date & Details
The initial public offering date, or IPO, for The NFT Gaming Company has not yet been announced by the company or its underwriter.
(Warning: Compared to stocks with more history, IPOs typically have less information for investors to review and analyze. For this reason, investors should use caution when thinking about investing in an IPO, or immediately post-IPO. Also, investors should keep in mind that many IPOs are heavily marketed, past company performance is not a guarantee of future results and potential risks may be understated.)
NFT Gaming intends to raise $7 million in gross proceeds from an IPO of its common stock, offering approximately 1.7 million shares at a proposed price of $4.15.
No existing shareholders have indicated an interest to purchase shares at the IPO price.
Assuming a successful IPO, the company’s enterprise value at IPO would approximate $43.1 million, excluding the effects of underwriter over-allotment options.
The float to outstanding shares ratio (excluding underwriter over-allotments) will be approximately 13.93%. A figure under 10% is generally considered a ‘low float’ stock, which can be subject to significant price volatility.
Management says it will use the net proceeds from the IPO as follows:
We intend to use the net proceeds from this offering for product development, marketing, working capital and general corporate purposes.
(Source – SEC)
Management’s presentation of the company roadshow is not available.
Regarding outstanding legal proceedings, management says the firm is not currently involved in any legal proceedings that would have a material adverse effect on its operations or financial condition.
The sole listed bookrunner of the IPO is EF Hutton.
How To Invest In The Company’s Stock: 7 Steps
Investors can buy shares of the stock in the same way they may buy stocks of other publicly traded companies, or as part of the pre-IPO allocation.
Note: This report is not a recommendation to purchase stock or any other security. For investors who are interested in pursuing a potential investment after the IPO is complete, the following steps for buying stocks will be helpful.
Step 1: Understand The Company’s Financial History
Although there is not much public financial information available about the company, investors can look at the company’s financial history on their Form S-1 or F-1 SEC filing (Source).
Step 2: Assess The Company’s Financial Reports
The primary financial statements available for publicly-traded companies include the income statement, balance sheet, and statement of cash flows. These financial statements can help investors learn about a company’s cash capitalization structure, cash flow trends and financial position.
My summary of the firm’s recent financial results is below:
The company’s financials have shown no revenue since inception and significant R&D and G&A costs associated with its platform development efforts.
Free cash flow for the six months ended June 30, 2022 was negative ($587,536).
The firm currently plans to pay no dividends on its common stock and to retain any future earnings for reinvestment back into the company’s growth initiatives.
Step 3: Evaluate The Company’s Potential Compared To Your Investment Horizon
When investors evaluate potential stocks to buy, it’s important to consider their time horizon and risk tolerance before buying shares. For example, a swing trader may be interested in short-term growth potential, whereas a long-term investor may prioritize strong financials ahead of short-term price movements.
Step 4: Select A Brokerage
Investors who do not already have a trading account will begin with the selection of a brokerage firm. The account types commonly used for trading stocks include a standard brokerage account or a retirement account like an IRA.
Investors who prefer advice for a fee can open a trading account with a full-service broker or an independent investment advisor, and those who want to manage their portfolio for a reduced cost may choose a discount brokerage company.
Step 5: Choose An Investment Size And Strategy
Investors who have decided to buy shares of company stock should consider how many shares to purchase and what investment strategy to adopt for their new position. The investment strategy will guide an investor’s holding period and exit strategy.
Many investors choose to buy and hold stocks for lengthy periods. Examples of basic investing strategies include swing trading, short-term trading or investing over a long-term holding period.
For investors wishing to gain a pre-IPO allocation of shares at the IPO price, they would ‘indicate interest’ with their broker in advance of the IPO. Indicating an interest is not a guarantee that the investor will receive an allocation of pre-IPO shares.
Step 6: Choose An Order Type
Investors have many choices for placing orders to purchase stocks, including market orders, limit orders and stop orders.
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Market order: This is the most common type of order made by retail traders. A market order executes a trade immediately at the best available transaction price.
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Limit order: When an investor places a buy limit order, they specify a maximum price to be paid for the shares.
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Stop order: A buy-stop order is an order to buy at a specified price, known as the stop price, which will be higher than the current market price. In the case of buy-stop, the stop price will be lower than the current market price.
Step 7: Submit The Trade
After investors have funded their account with cash, they may decide on an investment size and order type, then submit the trade to place an order. If the trade is a market order, it will be filled immediately at the best available market price.
However, if investors submit a limit order or stop order, the investor may have to wait until the stock reaches their target price or stop-loss price for the trade to be completed.
The Bottom Line
NFTG is seeking public capital markets funding to advance its NFT Gaming platform and related technologies.
The market opportunity for NFT products and services is large and expected to grow at a very high rate of growth in the coming years, so the company enjoys strong industry growth dynamics in its favor.
EF Hutton is the sole underwriter, and IPOs led by the firm over the last 12-month period have generated an average return of negative (68%) since their IPO. This is a bottom-tier performance for all major underwriters during the period.
The primary risks to the company’s outlook are its lack of revenue history and large competitors in the form of major exchanges and existing platforms.
As for valuation, management is asking investors to pay an enterprise value of around $43 million at IPO, despite no revenue and an incomplete platform.
While the NFT space has shown remarkable growth recently, it has also produced extremely high volatility and the NFT market now is generating a fraction of the user volume compared to the summer of 2021.
The low nominal price of the stock combined with the company’s focus on the crypto space may attract day traders seeking volatility.
But, given the company’s lack of revenue, the IPO is purely speculative at this stage, so my opinion on it is on Hold.
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