Source: Roman Kosolapov/ Shutterstock
Mobile global esports (NASDAQ:MGAM) — perhaps better known as “Mogo” — is making some waves on Friday. That’s when the company goes public, and MGAM stock soars as a result.
On Friday morning, Mobile Global Esports was offering 1.5 million shares of common stock at $4.00 per share. The initial public offering (IPO) will bring the company approximately $6 million net of fees. In addition, there is a 30-day over-allotment option to purchase an additional 225,000 shares or 15%.
If the ticker looks familiar, that’s because MGAM stock was previously public. The company, then known as Multimedia Games, was acquired for $36.50 per share in a $1.2 billion cash deal.
However, these are not the same companies.
Mobile Global Esports is an esports specialty company headquartered in San Clemente, CA. However, the main focus is on the Indian esports market. From the company: “Global eSports is a professional eSports organization that owns teams around the world in various titles such as CS:GO, DOTA 2, Fortnite, Overwatch, PUBG, Rainbow Six Siege, Apex Legends, etc.”
While investors are skeptical about what the future holds for esports, it’s clearly gaining momentum. For example, esports will make its debut at the Asian Games, which have been postponed to September 2023 due to Covid-19. The Asian Games “is a continental multisport event held every four years among athletes from across Asia.”
MGAM stock hits Wall Street with a bang
Making a public debut at this point is no easy feat given the weakness in the broader market. In the days leading up to Mobile Global Esports’ debut, the company increased the number of shares for sale but lowered the IPO price.
The company originally planned to sell 1 million shares at between $6 and $6.75 per share. At halftime, that would have brought in about $6.37 million in proceeds. However, the company elected to sell 1.5 million shares at between $4 and $5 a share, ultimately finishing at the low end of its range.
As previously mentioned, this brought in approximately $6 million in revenue for the company. However, MGAM stock has been trading quite well so far this afternoon. Shares spent most of the morning cutting between $4 and $5.25. However, as of 1:30 p.m. Eastern, the stock has really picked up speed.
At last check, the shares were trading above $10 per share, up 150% from the IPO price. It currently has a session high price of $12.49 per share.
Investors who were willing to take a risk in an IPO in the midst of a bear market are being paid for their risk-taking today. It helps that Nasdaq is enjoying its third consecutive daily rally of over 1%.
Although investors might want to exercise some caution. Mobile Global Esports has “not reported any revenue from operations and had no material revenue-generating businesses as of March 31, 2022,” while “MGAM was first organized in March 2021.” However, “the company said the IPO will provide enough cash to meet its needs for about two years.”
At the time of publication, Bret Kenwell held no position (neither directly nor indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com’s publicity guidelines.
Comments are closed.