Motley Fool Australia

Emerge Gaming (ASX:EM1) share price sees explosive growth

Colourful explosion to symbolise ASX share price growth
Image source: Getty Images

Emerge Gaming Ltd (ASX: EM1) is a small cap share with a market capitalisation of $96 million. It is developing a mobile eSports platform with real cash prizes on offer for players. During Friday’s trading, the Emerge share price shot up by 36.36%. Moreover, the company’s shares have skyrocketed since last Monday, soaring more than 136% over the week’s trading. 

What’s moving the Emerge share price?

The company’s ‘Miggster’ mobile gaming and eSports platform is due for release in 15 countries in November. This product builds on the company’s existing tournament platform technology with an increased focus on community competition. Moreover, the platform will provide reward pools worth approximately US$500,000 (around A$700,000).

Last Monday, the company revealed it had achieved 3 million pre-registrations for the platform within one week. Furthermore, each subscription starts at US$8.50 per month providing much needed cash flow for the fledgling technology platform. However, the company will receive only 64.5% due to its go-to-market strategy.

Emerge already operates an online eSports platform it launched with South African company, MTN. In addition, the company has already achieved 25,000 subscribers of which Emerge pockets 40% of fees. MTN pays for marketing and cash prizes. 

The go-to-market plan

Possibly the key point in last week’s movement of the Emerge share price was its go-to-market strategy. The company has entered into an affiliate marketing agreement with Impact Crowd Technology, a company seeking to mobilise a community salesforce. The current number of pre-registrations, 3 million, make it increasingly likely the Miggster platform will achieve the 100,000 subscriber guarantee in the agreement. 

At 100,000 subscribers, Emerge will generate gross revenues of $850,000 per month. Accounting for the 64.5% of revenues as per the agreement, this translates to $548,000.

Johan Staël von Holstein, CEO of Impact Crowd Technology parent company Tecnología de Impacto Multiple S.L. (TIM), commented:

I truly believe that online gaming on mobile devices will be a great success for everyone involved. And we could not have asked for a better business partner than Emerge Gaming in this promising joint venture. We have the most ambitious and fastest growing sales force in the world while Emerge Gaming delivers outstanding technology solutions and content.

Gregory Stevens, CEO of Emerge Gaming, commented:

The ability of Emerge to market its eSports and Gaming products through an established and successful affiliate sales network delivers rapid growth and scale whilst targeting a key strategic growth market of high lifetime value users. We are excited to be partnering with TIM, leveraging their 10 million affiliate member network as both users and advocates to market our tournament platform technology and support our objective of building the world’s biggest gaming community.

Foolish takeaway

The rapid growth in the Emerge share price underscores the effectiveness of affiliate marketing for this product. Within the first 68 hours, the company had over 1 million pre-registrations, leading to 3 million within the first week. A second takeaway for this product is the introduction of community level cash prizes. Moreover, the company points out that the addressable market is US$90 billion in mobile gaming revenue. 

With the product launch due in November, and the affiliate marketing approach still in full swing, it will be very interesting to see the percentage of registrations the company is able to convert to paying subscriptions.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

*Returns as of February 15th 2021

Motley Fool contributor Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Related Articles…

Latest posts by Daryl Mather (see all)