On Friday my view was that The Farm51 was undervalued. Thanks to PewDiePie playing Get Even this weekend, it is now even more undervalued.
The largest holding in my portfolio at the moment is The Farm51. The reason is because I think it offers the best risk/reward of any gaming stock in the world at the moment.
My first of many trades in The Farm51
My target price for The Farm51 has been 27pln. One basis for that target price was that Get Even would sell 1m copies and thus revalue the product pipeline of The Farm51.
Now that PewDiePie showcased Get Even I believe the game could sell 2m or more. The Farm51 only keeps 20% of sales of Get Even, so the impact is not as much in direct sales, as it is in revaluing its product pipeline to be in line with other AA-studios.
The Farm51 will have very successful FPS/puzzle game (Get Even) out in May (although Bandai has the IP). They are planning to launch a MMO in 2018, and already have another FPS in development for 2019 as well as right of first refusal on Get Even sequels. The market cap of The Farm51 should therefor at least be in line with Funcom, which is valued at 370mPLN compared to 131mPLN for The Farm51 (as per Friday close on a fully diluted basis).
That makes The Farm51 probably the only game studio where I see >100% upside in the share price at a low risk.
I will publish my full analysis The Farm51 in the research section in the coming days.