The G5 Entertainment share has surely been a rocket over the last year, however, ever since it’s rapid increase at the beginning in 2011 to the SEK 23-25 levels, shareholders saw their patience tested.
Looking at the fundamentals, the stock is dirt cheap as I have argued for many times before. The problem at this point is the still too small shareholder base and the listing at small Swedish stock exchange “Aktietorget”. I hate the term “overowned” but in G5 Entertainment’s case I think it fits rather well. Everybody who is aware of the story owns the share already and general turnover in the share is low. On top of it, it seems as if several investors have recently decided to realise some of their astonishing 700% profit since the beginning of 2010, putting selling pressure on the stock.
So what will take the stock higher from the current discount levels? News, news, news. All the company can do at this point is to continue to deliver positive news including new game releases and positive profit warnings. Personally, I am convinced that one way or the other, we will see G5 Entertainment’s share at SEK 40 or higher within the coming 12 months. If the market does not gradually value the company higher, some acquirer will take advantage of the mispricing in the market.
That said, already this week, the company is likely to publish 2 new games for iphone and ipad, sequels of its blockbusters “Supermarket Mania” and “Treasure Seekers”. My guess is the stock will trade above SEK 24 by the end of this week. Here is a list of the scheduled game releases for 2011: http://www.g5info.se/spelmatrix.htm
(for my more detailed take on the G5 Entertainment case please go to www.nordicinvestor.de