Mobile Global Esports NASDAQ:MGAM, an Indian electronic sports platform, announced the pricing of its Initial Public Offering (IPO) of 1.5 million common shares at a public offering price of USD4.00 per share, for gross proceeds of approximately USD6.0m before deducting offering expenses on 29th July.
The shares began trading on the Nasdaq Capital Market on Friday, with the offering expected to close a few days later on 2nd August, and soared throughout the day, ending up at USD11.19 – a 180% intraday increase.
Mobile Global Esports was organised in March of 2021 to carry on and expand an eSports business started by Sports Industry of India in 2016. Through a series of contracts, the rights to the eSports business were assigned to Mobile Global Esports a few months later in October. The company is now building out and expanding the business created by Sports Industry of India, which is focused on the rapidly growing eSports industry.
Mobile Global Esports India-focus
Headquartered in California, Mobile Global Esports places special emphasis on India and other South Asian markets, believing that these represent the largest and fastest growing eSports markets in the world. The company says it is the only business in India to organize and sponsor an officially sanctioned national championship for university eSports.
Initially priced at USD4.00, stocks of Mobile Global Esports rocketed on Friday and ended the trading day at USD11.19, which represents a staggering one-day appreciation of almost 180%. In addition to the issue of 1.5 million common shares, the company has granted the Underwriters a 30-day over-allotment option to purchase an additional 15% or 225,000 shares. WestPark Capital was the sole Book-Runner and Underwriter for the offering.
Given the weakness and uncertainty amongst global markets today, making a public debut at this time is no easy task. In the days leading up to Mobile Global Esports’ debut, the company increased the number of shares for sale but lowered the planned IPO price.
The company has estimated that the net proceeds, after substituting the underwriters’ USD600,000 discount, the USD120,000 non-accountable cost allowance and the payment of an estimated USD300,000 in offering expenses, will be just under USD5m. Of this amount, over half will go towards sales and administrative expenses, whilst a further USD787,000 is anticipated to be used for operating expenses, which include streaming expenses, cost of sales, marketing, event coordination and site expenses. The remaining amount, expected to be almost USD1.5 million, is earmarked for technology development according to Duncan Ferris of Digitonic.
Teenage kicks
The eSports market is certainly a flourishing industry, with many teenagers and young adults invested in competitive gaming and its online communities. From this perspective, Mobile Global Esports’ long-term investment prospects appear promising, but it is difficult to determine exactly how successful the company will be due to how young it is.
Mobile Global Esports has not reported income from operations and had no significant revenue-generating operations as of March 31, 2022, even though it was first organised in March 2021. The firm has, however claimed that the IPO will provide enough cash to meet its needs for about two years.
It is also important to note that IPOs tend to be highly volatile in the first few trading days. As such, Mobile Global Esports’ share price could vary dramatically this week, an outcome which will be exacerbated by the uncertain global economic landscape witnessed in recent months.
