Rich likes to keep his ear to the ground for up-and-coming companies, especially if they operate in new and exciting industries. Outside of cannabis, one of the absolutely most exciting markets is the gaming market, and perhaps no gaming company more embodies “up-and-coming” than Enthusiast Gaming Holdings (TSXV:EGLX) (OTCQB:ENGMF).
EGLX stock has had quite an interesting 2019. It entered the year at $1.00 and slowly climbed up the market before exploding suddenly to $2.70 in September. It gradually declined back to around $1.61, but just yesterday began rising again.
“”Enthusiast Gaming has been a good winner in 2019. It’s gone up tremendously in the past, so is this a buying opportunity?” asks Rich. “It might be, because Enthusiast Gaming has so much potential. Let’s get right into it, because gaming is the future.”
Enthusiast’s Three Pillars: Media, Esports, and Events
Enthusiast Gaming’s network of gaming media websites and channels currently attracts more than 200 million monthly users. This makes it the largest gaming network in the English-speaking world. The company also receives more than 30 billion ad requests and over 1 billion page views on a monthly basis.
The company’s digital media platform includes over 100 websites such as Destructoid, The Escapist, Nintendo Enthusiast, and The Sims Resource. It also works with a variety of video game personalities and influencers through its 900+ YouTube channels.
Enthusiast is also operating in the rapidly growing esports space. Through its recent merger, the company owns and manages seven professional esports teams, including the Vancouver Titans Overwatch team and the Seattle-based Call of Duty team.
Finally, Enthusiast runs the largest gaming expo in Canada, Enthusiast Gaming Live Expo, or EGLX. The expo brings more than 25,000 visitors, 80 games, and over 100 exhibitors together, and it continues to grow year after year.
EGLX Performance and Quarterly Results
“A lot of people know about them, but how many people are actually holding this stock?” asks Rich. “They reach 200 million people, that’s incredible. And there’s so much upside from these prices.”
Enthusiast Gaming stock only began trading on the OTC markets on Friday. This morning, EGLX shares jumped from $1.50 to $1.70, gaining 13.3% in value in the blink of an eye. Where might the stock go from here?
According to the company’s quarterly results, published at the beginning of December, Enthusiast achieved pro forma revenue of $6.3 million in the quarter ending September 30. This was with consolidated gross margins of 49% for the period.
Enthusiast Gaming’s Bright Future
For the fiscal year 2019, Enthusiast expects to post revenue of $22 million. As its network reaches 200 million gamers, this leads to an average revenue per user (ARPU) of just $0.11.
Comparable companies in the gaming sector, like IGN Entertainment or Twitch.TV—which in 2014 was bought by Amazon (NASDAQ:AMZN) for close to $1 billion—have a significantly higher ARPU. This highlights not only how undervalued EGLX is, but also how much room the company has to grow.
“I think gaming is going to be huge, and I think right now is the time for us to invest in gaming,” says Rich.
What do you think? Is EGLX the right play for the gaming boom? Do you have plans to invest in this company? If so, let Rich know about it!
Also, if you liked this post, make sure to check out Rich’s profile of another exciting esports company, New Wave Esports Corp. (CSE:NWES).
Featured image: DepositPhotos © Gorodenkoff