MSGM - Motorsport Games (MSGM) - A Look Under The Hood
President departs. The company announced the departure of Stephen Hood, the president of Motorsport Games and person responsible for the Company's Development Studio. Dmitry Kozko, the CEO, will be taking the added responsibilities of the president and will oversee the company's Development Studio.Dmitry takes charge. We believe that Mr. Kozko is capable of taking on the added roll of overseeing the company's Development Studio. He has experience in this area as the past CEO of Utracast and as the president and director of Net Element. We believe that the recent departure of Stephen Hood highlights the disappointment in the performance of NASCAR21: Ignition, which launched October 28. A setback, but game not over. The company has and will be offering patches to address many of the issues that fans have highlighted. In addition, new game features will be addressed in future yearly updates. The disappointing launch of the game does not take away from the investment premise that the company will be building and diversifying revenue streams through additional game launches. The company will be launching 4 games in 2023.Making assumptions. Assuming that NASCAR21 missed expectations by 50%, the revenue impact would be roughly $9 million to our full year 2022 estimate and could lead to an $11 million reduction in our revenue estimate in 2023 to $23 million. Even with this type of revenue miss, the MSGM shares would appear compelling near current levels. Lowering price target. The MSMG shares are down a significant 75% from highs in October, 2021. We believe that the recent price weakness reflects the disappointing performance of the NASCAR21 launch. Near current levels, the MSGM shares would trade at a compelling 1.3 times EV to our prospective full year 2022 revenue revision. Based on the prospective revision, we are lowering our price target to $10 from $20, while maintaining our target multiple of 5.4 times. At this time, we are maintaining our Outperform rating given the favorable risk reward relationship. Read More >>