With the recent Facebook IPO failing to live up to the hype (for those of you who did not keep track, the price for the shares was increased to 38 USD for the IPO, "to reflect its oversubscribed status" (demand was expected to be greater than the supply), rather than the original suggested value of 28 USD and upwards per share). The high price and technical issues forced the banks underwriting the IPO to have to interfere on day of the IPO and buy Facebook shares in huge volumes to prevent the shares from dropping below this 38 USD. With the banks this week no longer willing to use their own money to artificially boost the shares, shares quickly dropped 11% to 34 USD the Monday after. At this moment, the price is around 27 USD. As we all might (or perhaps might not) know, MindArk has been planning an IPO for many years, and a credible source recently tipped us that these plans are far from dead, with MindArk looking to try again this very year (We received this note prior to the Facebook IPO). The latest financial figures from the MindArk group (1st half year of 2011. No newer numbers have been released by MindArk since June 2011) showed a net loss of 8 million Swedish crowns (SEK) (roughly 1.1m USD). The previous year's first 6 months, net loss was 13 million SEK (~1.7 m USD). Net sales were 3.4m SEK, or about 0.5 m USD. The semi-annual report mentions that the projection for the second half of 2011 expects to see an increase in cash flow, and perhaps even a small net profit. Of course, the sale of the Calypso Land Deeds brought some much needed cash into the coffers, but even clever book-keeping will not turn a one-time cash injection into instant profit. At the same time the land deeds will entitle holders of the deeds to a cut in the profit of Planet Calypso, thus leading to less income. On the upside, costs were cut drastically in the first half of 2011 (most noticably by the leaving of employees who went to SEE Digital Studios), which might make it easier to end 2011 with actual black, rather than red numbers. However, because MindArk has not yet published a new semi-annual report, no concrete numbers are known. At the same time, MindArk invested heavily in their platform, first converting to CryEngine, and since then adding missing typical MMO-systems like missions, achievements and vehicles. Once the last missing systems are in place, investment funding might be able to drop, meaning the results should become more favorable. MindArk will also have to somehow show or proove that their business model as a platform provider forms a solid basis for their future growth model. While we have no insight into the actual results of the planet partners, it does not appear as if they are doing as well as MindArk might have hoped. The introduction of 3 new planets (with Cyrene not having launched yet officially, we will not count them), did not yet lead to a massive increase in active participants, and seeing all the companies running the planets are private companies, we do not have a real insight into how they are doing financially. Unless these companies will shed some light onto their finances, it will be hard for us, as Entropia Universe participants, to see how successful the Planet Partner concept is. At the same time, the same will apply to MindArk themselves. MindArk will have to convince their partners to share their results with them, if they want to prove that the MindArk group is on the right track, and to woo potential investors. The possible IPO, however, might show why MindArk has started investing in advertising, invested in the Facebook platform (which I am sure they hoped would do better than it apparently is doing), and is trying to rekindle the enthusiasm of old-time players. There are also the current robot event with fabulous prizes as well as the "loot 100k USD worth of land deeds" event going on, and it is the author's guess that by pushing Calypso (which is still run by a MindArk subsidiary company) in this way, the value of the MindArk group as a whole will increase, and thus help to make the upcoming IPO easier to promote to potential investors. The newly hired CTO might also have a few tricks up his sleeve. Seeing the numbers are still unknown at the time of writing, let's speculate a little. For the sake of argument, let's assume that MindArk manages to climb out of the dip and in 2012 show a positive result again. For the sake of argument, let's then assume the net result will be equal to the highest recent numbers know, those of 2006/2007, which, according to the MindArk 2009 annual report, were in the 10 million SEK range (or about 1.3 million USD). If we use the ratio used for the Facebook IPO (100 times profit), we would thus arrive at a MindArk value of 130 million USD. Mind you, this is totally based on speculation, and there are major differences between Facebook and MindArk (primarily the number of registered users, which form the key asset of Facebook. 900 million Facebook users versus 1 million EU users), and Facebook showing the ratio mostly based on hype. The 1.3m USD profit is also perhaps a tad overly positive, and after the Facebook fizzle, investors might be very reluctant to invest in a relatively unknown company like MindArk that until very recently showed red numbers in their books for 3 consecutive years. Perhaps a more realistic estimate would (in the author's opinion) be to use a ratio of 15 (which, mind you, is still extremely generous. Google,which has shown reliable growth for all but one year, currently trades at about 12-15 times of its current expected yearly earnings), which thus would value MindArk at about 19.5 million USD. Will the Facebook flop affect MindArk plans to take the company public this year? Who knows. Probably it will have been an IPO closely watched from the MA offices in Goteborg, and undoubtedly, they, too, will be disappointed with the outcome. It might be worth postponing the desired IPO a bit until the Facebook fiasco has been forgotten, and until the books show a more positive result for the last few yearly financial statements. It would also be wise for MindArk or potential investors in it to research the reasons for the failing of Facebook to impress investors. Will investing in MindArk be something worthwhile? I personally cannot see why not. They have been doing their own stuff for 10 years, and are still around. If we can believe statements made by Kim Welter, Calypso has been showing black number for several months in a row, and with Arkadia and Cyrene both ready to start beating the press drums, we might soon see a major influx in new blood, ready to spend some of their money in Entropia Universe. What's your take? Do you think when MindArk goes public, you might pick up a few shares? I just might, if I have some spare cash lying around...
I would probably watch the share price movements for the first few weeks or so before deciding whether to invest. If it looked positive, then maybe...
Hi, Huh, this is a difficult question ... One thing is quite sure, I'd not buy any shares. Ways too risky, and by far not enough chances for a profit! Why? Let's have a look: MA is a tiny company, and the available numbers don't show any sign of real, sustainable profit, or even of remarkable growth. They have shown, over the years, an ability to ignore the wishes of their customers, an ability to disappoint them and to hurt their own income that's IMHO unrivaled. I doubt even the most dumb of all those stupid analysts would recommend this share ... . They operate in a very limited niche marked, and show no sign they'd want to change this. The problem is the high amount of gambling (high chance to win/ loose heavy amounts of money in very short time), and the very high costs to play for most participants. The vast majority of potential players will never accept this. Thus the growth chances are very limited, EU will ever be a "special audience Indy game". Until MA would drastically change the direction, then it wouldn't be such a niche game anymore, but would certainly loose 90% of its die hard participants, each one withdrawing huge sums - out of the frying pan, into the fire ... . After quite some talks with ppl who should know I cannot help but fearing they're running quite close to the edge of legality (gambling laws mainly). Laws may be aggravated, the application may be intensified, who knows. Additionally, money laundering is a big topic among the governments, and EU can easily be used to do this (lootable PvP, deposit/ withdraw etc.) ... (This is IMHO one of the most dangerous threats to EU at all - religious maniacs winning the elections in a big country, their need to demonstrate how righteous they are to their followers then, IPO and publicity just in time, a little more attention, a blog read by the wrong person ... MA as a tiny company from a "socialist country" would be the perfect "godless gambling providing" & "money laundering helping" victim.) . After the Facebook IPO quite some ppl will shy to buy any strange IT shares for quite long time. I really doubt MA would get a bank for the IPO other then one who would mercilessly exploit them, then letting implode them. Organizing an IPO of such a company in these times isn't what any bankster with an IQ above it's shoe size number would even consider profitable without massively cooking them. . Regarding all these topics I only see one chance to succeed with MA shares: The IPO would actually succeed against all odds, cause a lot of publicity, and some company/ hedge fund would decide that "We need this in our portfolio!". An early takeover bid, not long after the IPO. But this wouldn't bring the profit to compensate the probability that it wouldn't occur. All this is my personal opinion, and could be plain armax dung, for sure. But it's my take. The presentation is a bit exaggerated, too. It's to demonstrate how I think, and to fuel the discussion. Don't be mad about it, it's me that is already, thus my nick ("MadMaiden"). Have fun!
My understanding of the FB IPO was that even the week before, no one could fix a target price. The $38 price was set by the banks involved in the IPO and insanely hyped by the media. About MA's possible IPO - I think the scale and situation is a little different.
A soc mate told me to cool my jets because this is a forum, not anything serious or rational. Comparing an MA IPO to FB is pretty weak. Sorry Admin.
I'd like to see more transparency from the company before I'd invest. Examples of info that needs to be shared: What happens to all the fees the game collects? What percentage does MA skim off the top of the "loot pools"? What is the average TT loot return including ATHs for the different professions? What is the organization's structure? I'd also like to see a constant flow of information and hiring of a PR rep, and some basic things like shorter withdrawal periods. They're making strides in the right direction, but I don't think they're quite there yet.
No nee No need to beet about the bush ;) I think MA would have to do another media trick along the lines of what they did with the launch of CND back in 05, only with even more layers. That might fool enough ppl to invest...
First let me say that writing about FB IPO and then compare it to MA is a comparison between Apples and Kiwis :) As far as i know from daily press the banker who supported the IPO of FB has been accused to have handled wrong informations so that the price of shares went up dramatically and now its going only to the worth where it belongs. And what more dangerous for FB is, that advertisers leaving this platform because they find theirself not well enough placed inside FB. Those paying customers wouldnt pay any longer as soon as they remark that their revenues are not growing in the same size they pay for the FB-Ads. So FB will be history in 2020 (so the analysts say) :)) No comparison to MA. Why? MA is a swedish Company and will hopefully be supported by a swedish bank which is (like here in Germany too) more realistic and not this kind of hazardous in their public information handout as with FB. Even if MA has got several errors to correct (missing Sponsor Partners - bad Supportsystem - long term development of the whole platformsystem - missing real cash card etc.) MA has a chance to have stable IPOs - and if the company become more attractive to the public they have a good chance to be stable over years (as they are for the last 6 years or more now). FB emissary program for a beginning was a not a bad idea but the incentives for the emissaries are to little so that the idea must be modified. There are really good ideas coming from all of us - (Dream on) if MA would listen to their customers a bit more ... (Dream off) ... Because its not yet a mainstream product it has got its chances and can be developed to one. Its up to us all that we support MA and the planet partners in their future plans and this for i would seriously think about buying some shares ...
hard to estimate what could happen here with a possible share price. i could imagine that it would start much lower than mindark believes. with a view on how long they are around and for how long some of the holding slogans are still put out "it has great potential" etc. compared to how many businesses and cooperations they made and blew up its not a good step to convert to a share model. if potential turns into never ending supply of potential it gets hard at one point to still convince someone. is like a soccer player which gets atested great talent by everyone but all ask now when he fires the rocket finally cause hes getting mid carrier now but never breaks through. the number of people selling out which seem to belong to the playersbases money backbones is increasing. a planet partner recently let go his crew. others also not doing well. property which is for sale with loss (castle in dresden) the operation as bank institute cancelled... pretty much any business which involes that they cant only play at their own rules fails. if they hype any share price with their evangelism it will crush down. shareholders will suffer same fate like the shareholders of german telekom or the facebook holders. for giving out shares they are way too late. there seem to have been a stable economy inside the game where item prices hyped into the air and high skilled avatars could profit on monthly basis by selling high end unlockable skills to extend. at this time they should have catched the positive developement and jump. what they urgently need at the moment is easy and numbered successes and keep running them to build an basis to higher their reputation so people actually regain trust in their business capabilities and are convinced in a high company value. but you cant reach that with PR alone. ask mindark what their greatest successes are in the past 10 years... you will be surprised what they list there. all things which are bound to evangelism instead of performance. change to cryengine is not a success for instance. ingame features still missing. and since no positive result with their day to day business. game bugs skyrocketed. customer anger very high. they will tell you about their visit at emmy or gaming fairs or that john bates speaks at ted. thes are no successes cause you just do that with PR when being alone in your market. here too low for 10 years: http://www.mindark.com/company/accomplishments/ its more time for them to let the church inside the village for now. stable successes. ongoing relations. solving customer requests constructively. repairing rep and trust. what is important now? where do they want to be in 5 years? where in 10 years? Greets
