Mobile Gaming's Next-Gen IPO Wave is Here

February 1, 2021

Gaming has quickly grown into one of the biggest industries in the market over the last year.

With billions of people forced to stay inside for long periods of time, every company with a hand in the video game industry found large growth.

To add to that, the launch of next-generation consoles brought supply shortages. Sony still hasn’t been able to ship out as many PlayStation 5s as consumers obviously demand.

But there’s another side to gaming, one without need for new hardware or dedicated console development.

And it has a long history of enthusiastic support from investors, hoping to get in on an astronomically-large user base: mobile gaming.

Today, one of the largest mobile game developers announced a deal to go public through a blank-check company.

But it’s a partnership created three years ago that makes this such a killer emerging profit opportunity.

A Little Mobile History

Mobile games are relatively new in the gaming universe. But they have already proven their profitability.

Way back in the early days of smartphones and tablets, you may recall the Farmville craze.

Publisher Zynga created a very simple but apparently insatiably-addictive farming game for Facebook users to work together to build farms right through the social media site.

At its height, some 80 million social media farmers were growing virtual crops along with poking friends on Facebook.

Zynga took to Wall Street to rake in this first wave of mobile money. The company IPOed in 2011 with a valuation of $7 billion.

Next came the Candy Crush craze.

Publisher King Digital was able to take mobile off Facebook and directly onto those smartphones that were then in everyone’s pockets in 2014.

It too raked in a $7 billion valuation, later sold off to World of Warcraft maker Activision Blizzard.

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To this day, more than one-third of Activision’s revenue comes from mobile games, led in part by King’s franchises.

That sets today’s news up nicely.

It Pays to Have the Right Partners

Hero Wars developer Nexters Global cut a deal to go public through a merger with Kismet Acquisition One Corp. (NASDAQ: KSMTU).

Bloomberg predicts the deal will likely be valued at $1.9 billion, an enormous sum for a company you probably haven’t heard of. But considering past mobile IPOs, it is still on the small side.

Though, with how Wall Street has been acting, that number is likely to change before this deal closes.

Nexters’ list of games is relatively small. But the number of users is high. And as you can imagine, the company made bank off the inflow of mobile gamers during lockdowns.

Some 5.4 million people use Nexters’ platform including players of Hero Wars and Throne Rush.

Though, that’s not what makes this deal so special.

In 2018, just as Nexters was rapidly growing outside of its original home in Russia, the founders of Playrix became major shareholders through an exclusive partnership.

Haven’t heard of Playrix? Well, it too is set to go public in the next few months. And it’s also an untapped goldmine in the mobile space.

Playrix is another game developer with titles including Homescapes, Gardenscapes and Fishdom. If you’ve ever played a mobile game of any type, you’ve heard of these names.

Playrix is one of the fastest-growing and most-aggressive companies in mobile gaming. Its ads have been under some legal scope too, as they don’t represent actual gameplay.

But that hasn’t stopped the company from becoming no. 2 in the industry, only behind King Digital.

This partnership is where the real value in Nexters’ IPO comes from.

Playrix’s IPO is going to garner all the headlines. But Nexters’ deal with it gives the smaller company full access to Playrix’s platform.

Nexters’ ties to the company with the widest and most successful new user generation network are going to be worth much more than $1.9 billion.

I expect that figure to go up from here as Wall Street absorbs this news… and partnership.

Keep an eye on this space. You might not hear much in the short term with all the market chatter focused elsewhere. But it’s one worth paying attention to nonetheless.

To your prosperity and health,

Joshua M. Belanger

Joshua M. Belanger
Joshua Belanger is founder of CounterVest and the editor of Hot Money Trader. He has been providing ordinary investors blockbuster returns since 2008. In 2018, the average return of Hot Money Trader beat the markets by over 15%

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