The NFT Gaming Company (NFTG) Launches $7 Million Micro IPO


What is the NFT Gaming Company?

Roseland, New Jersey-based The NFT Gaming Company (NFTG) was established to develop proprietary games and related Non-Fungible Token (NFT) technologies to provide game players around the world with unique experiences.

Management is led by chairman and CEO, Vadim Mats, who has been with the company since 2022 and was previously CFO of DatChat (THAT IS) and before that CFO of Grand Private Equity, a fintech-focused family office.

The company’s main offering in development is Gaxos, which aims to bring gamers, publishers and developers together on a platform with the ability to earn rewards and “participate in other opportunities.”

The platform will initially be built on the Polygon Network (MATIC).

As of June 30, 2022, NFT Gaming has posted a $2.1 million fair market value investment as of June 30, 2022 from investors.

The company has not yet posted or received any revenue, but is likely to market its platform through digital media and online and offline events.

NFT Gaming Market and Competition

According to a 2022 market research report from SkyQuest Technology, the global market for NFTs was estimated to be $15.7 billion in 2021 and is expected to reach $122 billion by 2028.

This represents a predicted CAGR of 34.1% from 2022 to 2028.

Key drivers for this anticipated growth are rising demand for digital artworks, both visual and audio, growing awareness of the technology among a wider range of consumers, and easier access to information and purchasing options.

However, growth in the market has been remarkably volatile, with strong growth in the summer of 2021, followed by a sharp drop in interest rates in the summer of 2022.

Major competitive or other industry participants include:

  • Coinbase

  • open sea

  • Larva Labs

  • cloudflare

  • Brave Labs

  • Binance

  • Skills Labs

  • others

NFT Gaming IPO Date and Details

The date of the first public offering, or IPO, for The NFT Gaming Company has not yet been announced by the company or its underwriter.

(Warning: Compared to stocks with more history, IPOs tend to have less information for investors to review and analyze. For this reason, investors should exercise caution when considering investing in an IPO, or immediately after the IPO. Investors should also consider Keep in mind that many IPOs are heavily marketed, past business performance is no guarantee of future results, and potential risks may be underestimated.)

NFT Gaming plans to raise $7 million in gross proceeds from an IPO of its common stock, offering approximately 1.7 million shares at a suggested price of $4.15.

There are no existing shareholders who have expressed an interest in buying shares at the IPO price.

Assuming a successful IPO, the company’s enterprise value at IPO would be approximately $43.1 million, excluding the effects of underwriter over-allotment options.

The float ratio to outstanding shares (excluding over-allotments by underwriters) will be approximately 13.93%. A figure below 10% is generally considered a low float stock, which can be subject to significant price volatility.

Management says it will use the net proceeds from the IPO as follows:

We intend to use the net proceeds of this offering for product development, marketing, working capital and general corporate purposes.

(Source – SEC)

Management’s presentation of the company’s roadshow is not available.

With regard to pending legal proceedings, management says the company is not currently involved in any legal proceedings that would have a material adverse effect on its business or financial condition.

The only listed bookrunner of the IPO is EF Hutton.

How to invest in the company’s stock: 7 steps

Investors can buy shares of the stock in the same way that they can buy shares of other publicly traded companies, or as part of the pre-IPO allotment.

Note: This report is not a recommendation to buy stocks or other securities. For investors interested in pursuing a potential investment after the IPO is completed, the following stock buying steps will be helpful.

Step 1: Understand the company’s financial history

While not much public financial information about the company is available, investors can view the company’s financial history on their Form S-1 or F-1 SEC filing (Source).

Step 2: Review the company’s financial reports

The primary financial statements available to publicly traded companies include the income statement, balance sheet, and statement of cash flows. These financial statements can help investors learn about a company’s capitalization structure, cash flow trends, and financial position.

Following is a summary of the company’s recent financial results:

The company’s financials have yielded no revenue since inception and significant R&D and G&A related to its platform development efforts.

Free cash flow for the six months ended June 30, 2022 was negative ($587,536).

The company currently plans not to pay dividends on its common stock and to withhold future earnings for reinvestment in the company’s growth initiatives.

Step 3: Evaluate the company’s potential against your investment horizon

When investors evaluate potential stocks to buy, it is important to consider their time horizon and risk tolerance before purchasing stocks. For example, a swing trader may be interested in short-term growth potential, while a long-term investor may prefer strong financials over short-term price movements.

Step 4: Select a brokerage

Investors who do not yet have a trading account start by selecting a brokerage firm. The account types commonly used for stock trading are a standard brokerage account or a retirement account such as an IRA.

Investors who prefer advice for a fee can open a trading account with a full-service broker or independent investment advisor, and those who want to manage their portfolio at a lower cost can opt for a discount brokerage.

Step 5: Choose an investment size and strategy

Investors who have decided to buy shares of company stock should consider how many shares to buy and what investment strategy to follow for their new position. The investment strategy will guide an investor’s holding period and exit strategy.

Many investors choose to buy and hold stocks for a longer period of time. Examples of basic investment strategies include swing trading, short-term trading, or investing over a long holding period.

For investors wishing to obtain a pre-IPO allotment of shares at the IPO price, they would ‘declare interest’ to their broker prior to the IPO. Declaring an interest is not a guarantee that the investor will receive an allotment of pre-IPO shares.

Step 6: Choose an order type

Investors have many choices for placing orders to buy stocks, including market orders, limit orders, and stop orders.

  • Market Order: This is the most common type of order placed by retail traders. A market order executes a trade immediately at the best available trade price.

  • Limit Order: When an investor places a buy limit order, he specifies a maximum price to be paid for the shares.

  • Stop order: A buy-stop order is an order to buy at a certain price, known as the stop price, which will be higher than the current market price. In the case of buy-stop, the stop price will be lower than the current market price.

Step 7: Submit the transaction

After investors fund their account with cash, they can choose an investment size and order type and then submit the trade to place an order. If the trade is a market order, it will be executed immediately at the best available market price.

However, if investors submit a limit order or stop order, the investor may have to wait for the stock to reach its target or stop-loss price before the trade can be completed.

It comes down to

NFTG seeks funding in the public capital markets to advance its NFT Gaming platform and related technologies.

The market opportunities for NFT products and services are great and are expected to grow at a very high rate of growth in the coming years, so the company enjoys strong growth momentum in the industry to its advantage.

EF Hutton is the sole insurer and its IPOs led by the company over the past 12 months have generated an average return of negative (68%). This is the lowest level performance for all major insurers during the period.

The main risks to the company’s prospects are lack of revenue history and major competitors in the form of major exchanges and existing platforms.

As for the valuation, management is asking investors to pay an enterprise value of approximately $43 million on the IPO despite no revenue and an incomplete platform.

While the NFT space has recently shown remarkable growth, it has also delivered extremely high volatility and the NFT market is now generating a fraction of the user volume compared to the summer of 2021.

The stock’s low nominal price combined with the company’s focus on the crypto space may attract day traders looking for volatility.

But given the company’s lack of revenue, the IPO is purely speculative at this stage, so my opinion on this is on hold.

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