Updated price target for The Farm 51

Although Get Even is number 6 on Gamespot's Xbox One ranking at the moment the delay of the game and the lack of social media support from Bandai has gotten me worried about the promotional push for the game.

I have actually had the pleasure to play the game as I had pre-ordered it on Playstation and it downloaded to my unit beforehand. I really enjoyed the game. All the corner-gun and phone mechanics are cool but this is at the core a story focused game told in a FPS mode. Imagine the game as the movie Inception, but instead of going into dreams you are going into memories. Memories that can change while you are in them, become bizarre, play tricks on you etc. The music was 10/10 fantastic. I recommend anybody who is going to play the game to first listen to this podcast with the game's composer about the music in the game. Although the scanned environments make the wall textures really cool and immersive, the use of the old UE3 engine is evident in that lightning and shading is not at the best. People going into this game expected an Doom style FPS or RE horror game will be let down as the game is none of that. 

Anyway, without Bandai support the game will not be able to sell as well as I had hoped. Therefor I have adjusted my model to assume only 150,000 units sold. This leaves World War 3 as the core cash-flow generating project for The Farm 51 in 2018. Hopefully we will hear more about the game in the near future and potentially a publisher deal during Q3. The game development had already gone quite far the last time I saw the game earlier this year. With GameInn grants and bond funding the company should be able to complete the game without the need of more financing. My new target price has been lowered to 18PLN after lowering my expectations for Get Even sales.

It is important to keep in mind that The Farm 51 is probably the cheapest listed game developer with a full development team and a upcoming IP in the world.

New investment idea published - The Farm51

I have been pretty quite on the blog because I have been very focused on my next investment case, Polish game developer The Farm51. I have written a few times about it, but now I have put together a comprehensive research report similar to the report on Frontier Developments back in 2016.

In the past The Farm51 has not been a company to get overly excited about, but now the company is moving into a new dimension with the release of their next game Get Even on 26th of May. In my view, it will establish The Farm51 as a first-rate studio and thus revalue the existing product pipeline (which includes a FPS MMO called World War 3) in line with other high quality studios.

Of course, investing in a company with almost no cash-flow in the past based on the release of future games is high risk so do your research and adjust your positions size accordingly.

Disclosure: I am long The Farm51 shares.

Read the full report here.

Get Even is to The Farm51 what Brothers was to Starbreeze, a very promising starter course

On the 9th of September 2013 famous video game reviewer TotalBuiscuit reviewed Starbreeze's game Brothers calling it one of the best games he had ever played. Back than Starbreeze was still considered indy. The shares were trading at 3.50 and the market cap was about 500mSEK. 

Brothers itself went on to win a lot of awards but was never a big cash cow for Starbreeze. But what it did was that it showed that Starbreeze was a AAA-studio in disguise and over time they proved themselves to the world and are now valued at 4,4bnSEK.

Yesterday PewDiePie played The Farm51's game Get Even. He liked it. He even commented that these days it is hard to know what indy means, because Get Even might as well be a AAA-production.

If you go to a new restaurant and the bread they put on the table is just the right temperautre and is offered with a great spread - you can be pretty sure the main course is going to be amazing. Just as Brothers was a the starter course for Starbreeze, Get Even is a starter for The Farm51. It will not make them a lot of money, but it is an indication that the main course is going to be amazing. 

At the current valuation of 130mPLN (~290mSEK) the risk reward is great. In my view this is like buying Starbreeze at 3.5SEK in 2013 - and the shares are now at 16SEK.

Once Bandai Namco rolls out the hype train in April for Get Even I belive The Farm51 train will also leave the station heading towards 50PLN.

Thanks PewDiePie – The Farm51 just became even more undervalued

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.