skip to Main Content
Get your free newsletter: Actionable insight each morning for self-directed investors. 

Gfinity (AIM:GFIN/FRA:3GF) sits in a sector we have been fans of for some time now, but that said, the share price has been slipping in recent months. Investors seem well disposed, however, to the news that Gfinity is going to buy Megit, which in turn owns website Stock Informer.

Gfinity shares have had their ups and downs in the last 12 months, and are still well off their 52 week peak of 6.2p. Even with the boost from the Stock Informer news, they are still trading at around 4.35p.

Positioned in the fast growing esports market

But what’s not to like about Gfinity? The company trades in the hot esports market which many investors believe will have a rosy future. The pandemic and the lockdown are considered by analysts to have provided esports with a shot in the arm. Gfinity has a market cap of about £40m and booked revenue in December 2020 of £1.51m.

Gfinity has some awesome partnerships for its esports business, and has worked with with likes of Formula One, the Premier League, Microsoft and Activision Blizzard. The company organises online and offline competitions for the large and growing global gaming community.

Gfinity Digital Media – aka GDM – is the company’s branded website and social media division. It also owns proprietary technology that helps to create what it calls “a level playing field” for participants in its competitions.


The Stock Informer deal

The acquisition of Stock Informer / Megit sees Gfinity paying half the consideration in cash and the rest in stock. The maximum payable over the earn out period is £1m. Gfinity raised £3.3m before expenses via a share issue. The company has announced a retail offer for shares through PrimaryBid, but Gfinity said the funds raised from retail investors would be used to investing in the business and drive further revenue growth.

A fundraise is being conducted by an accelerated book building process which will commence immediately. The issue price represents a discount of 1.2% to the closing share price of 4.05p per share on 20 August. The fundraise is being conducted by Canaccord Genuity.

“Gfinity’s strategic focus is based on strengthening and growing ‘what we own’, in particular the Gfinity Digital Media group,” explained John Clarke, CEO of Gfinity. “The proposed acquisition of Stock Informer delivers this. It is a highly profitable ecommerce referral site for gamers and their lifestyles. Stock Informer will be embedded into the GDM division once the transaction completes. It is a transformational acquisition for the company and highlights the ambition of the Directors to continue to drive profitable growth within the group”

Stock Informer looks like a very good fit for Gfinity and a missing piece of the puzzle in terms of its suite of offerings for gamers and for its corporate clients. Stock Informer has a presence in both the UK and US markets and has built a reputation as a go to site to buy hard to secure products. It has 1.9m visitors a month and 344,000 followers on its social media channels.

The Stock Informer business could do well for Gfinity as a global chip shortage and a shift to online shopping boost digital sales and the quest by gamers for critical hardware. It could also be a platform for the sale of next generation gaming consoles.

Related

Become a better investor with SharePad Designed to give you the confidence to pick your own investments, Sharepad gives you access to a wealth of information on UK, US & European stocks. Find out more

Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Stuart Fieldhouse

Stuart Fieldhouse

Stuart Fieldhouse has spent 25 years in journalism and marketing, including as a wealth management editor for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong. He was the founder editor of The Hedge Fund Journal.

Stuart has worked at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Based in The Armchair Trader’s London office, Stuart continues to advise fund managers, private banks, family offices and other financial institutions.

Stocks in Focus

Here are some of the smaller companies we are following most closely. They all represent significant growth stories in our view. Our in-depth reports go into more detail on why we like them.

Comments


Get your free daily newsletter: 

Thanks to our Partners

Our partners are established, regulated businesses and we are grateful for their support.

Pepperstone
FP Markets
IG
Spreadex
Trade Nation
WisdomTree
ActivTrades
Back To Top