Allied Gaming and Entertainment (AGAE)

Esports company trading less than net cash

Allied Gaming and Entertainment ticker symbol AGAE trades on the U.S. Nasdaq exchange. It’s incorporated in Delaware, U.S.A. The company is in the electronic sports video game business or “Esports.” Esports, an abbreviation of “electronic sports, encompasses a diverse range of competitive electronic games that are played by gamers against each other. Popular esports games include Fortnite, League of Legends, Dota 2, Counter-Strike, Call of Duty, Overwatch, and FIFA.

Unlike the traditional video games where players can play alone against the computer or console, esports has evolved to include a community and spectator aspect.

AGAE has $59.7 million in net current asset value. Current assets are $78.3 mil and total liabilities are $18.6 mil. $72.8 million of current assets are in cash and short-term investments that are CDs. Net cash and equivalents is $54 million.

The stock closed at $.82 on Thursday May 3rd with a market cap of $36.2 million. So it is trading for roughly 60% of net current assets and 67% of net cash.

Their three revenue streams are live events, multi-platform content and casual mobile games.

I think this is a good market and has a lot of popularity in the younger generations and I think the popularity will continue for many years.

Allied Gaming’s AGAE main property is the HyperX Esports Arena Las Vegas in the Luxor Hotel in Las Vegas. It is a 30,000 square foot multi-level arena that gives a unique gaming and entertainment experience.

The arena features a state-of-the-art gaming and broadcast center, and is an ideal venue for both amateur and professional gamers.

It hosts various events, including video game competitions, and provides rentable space and equipment to the esports and interactive entertainment industry. It is a popular destination for gamers and esports enthusiasts.

In 2022 management implemented a stock repurchase program authorizing up to $10 million to be repurchased of the companies shares of common stock. In November of 2023 they repurchased $7.3 mil of stock at an average price of $.83 per share.

Looking back at the chart history the major support levels have been from $.76 to around $.80 a share going back to Nov 2023. In 2020 the lowest the stock hit was $.86. We know managent found the stock undervalued at the current price and it has held the $.80 area many times lately.

Some of the uncertainty with the company to me is the plan they started to diversify into other areas like mobile and electronic games. They bought Z-Tech a mobile game company for $7 million cash recently in China. I suppose it is good they are diversifing but AGAE multi-platform and streaming revenue grew 42% in ‘23 and total revenue grew 20%.

The company isn’t profitable but they are sitting on a lot of cash and revenue is growing.

Disclosure: I don’t have a position at this time but may buy shares in the future.