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Bidstack Group: what is driving the share price of this video gaming stock?


Shares in Bidstack Group (LON:BIDS), the native in-game advertising platform, have been on the climb in the last week. At £4.19 they are nowhere near their 52-week high of £6.50 but certainly a good deal higher than their 52-week low of £1.60.

Bidstack is an advertising technology company, creating targeted and automated native in-game advertising for the global video games industry. During the pandemic, Bidstack also worked alongside the UK Government to promote the ‘Stay Home, Save Lives’ campaign. Its proprietary technology is capable of inserting advertisements within video games. Customers are games publishers and developers (on the supply side), and advertising agencies, brands and media-buying platforms (on the demand side). Bidstack was the first Crowdcube-funded company to go public via a reverse takeover in September 2018.

What’s going on at Bidstack?

We’ve already noted that volumes have been unremarkable recently and while there’s no formal news, the group has had a busy year so far. In February, Glen Ames was appointed as chief technology and product officer, and in March, Bidstack announced a new partnership with Xaxis, GroupM’s outcome media specialist. This means Xaxis can access Bidstack’s portfolio of in-game ad formats and branded experiences. It also provides Xaxis with access to Bidstack’s global supply of programmatic inventory which features 70+ exclusive titles including Dirt 5, Football Manager 2022 and Top Eleven.

Also this month, Bidstack created a new partnership with Goodville: a farm adventure game. Bidstack’s SDK is integrating into the title allowing ads to be served onto banners and billboards around the game’s virtual world without intruding on the playing experience.

Financial prospects for 2022

Bidstack is not yet profit making, and at end December 2021 Bidstack announced that it had been making a number of cost-savings measures. Ditching some low margin revenue opportunities and focusing on higher margin growth areas – one being signing an exclusive partnership late last year with Azerion, the digital entertainment and media platform. Bidstack also secured a revenue stream of a guaranteed minimum of US$30 million advertising spend over two years, which commenced on 1 March 2022.

The Bidstack board expects FY21 gross margins to have improved significantly, to in excess of 30% (FY20: 13%). However, because of delays in completing certain agreements and certain deferrals of ad campaigns, it anticipates revenues for FY21 to be below current market expectations but significantly higher than last year (FY20: £1.7m).

Note that FY20’s operating loss amounted to -£6.9 million mainly down to admin expenses of over £7m. In FY19 the operating loss was -£5.3m. The group stated mid-way last year that it is dependent on further equity fundraising in order to operate as a going concern – worth following up in the FY21 report which should be out soon. Year-end cash is expected to be in line with market expectations at approximately £7 million.

A growing market for Bidstack

Nevertheless, it is exciting times for global in-game advertising. Estimates put the industry growing to over $300bn in the next five years and further good news for Bidstack as more players are watching ads too – from 21.6% in 2020 to 25.9% in 2021. Bidstack is undoubtedly an interesting proposition. It is just a question of how long investors want to wait for the returns to roll in.

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This article does not constitute investment advice. Make sure you do your own research or consult a professional advisor.

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