ab1 media, page-1325

Very useful Blockchain Gaming World interview with Yat.

"We acquire [more traditional] game companies with [existing] audiences and basically bring them onto blockchain". Yat makes an important point that many of these game companies are resistant to blockchain or uncertain. Therefore, this makes partnership arrangements less feasible. Hence, taking them over, according to Yat is the optimum strategy.

This model has proved successful (and in my view Animoca are the leaders in this respect), so with $100m + of capital it will allow Animoca to scale up acquisitions. In terms of the cap raise proceeds, Yat says:

"This is not about rainy day [money]. We are going to deploy this capital hard and fast".

One could surmise from this that Animoca have already lined up several acquisitions and investments, so it is likely that the next six months will be exciting.

He also seems to be positioning the company as a vehicle for more traditional institutional investors to get exposure to NFTs. This also seems to be a smart strategy, although I continue to hold the view that the compliance issues will continue to suppress the share price and dissuade many institutional funds from investing in Animoca. Put another way, what might be fair value if Animoca had put to bed all of the compliance issues? Diffucult to say, but almost impossible to argue that the price would not being higher than $1.10.

Time will tell. Based on what Yat has said, we can expect a ramp-up in the scale and veracity of acquisitions and, consequently, the market should re-rate the stock price higher. For example, validation of Animoca's strategy would be another capital raise in 6-12 months that values the company 25%, 50%, 100%+ higher. The next raise could be $150m or higher (providing even more funds to scale further). So long as the valuation is higher than the last raise (e.g. 25% +), then this is positive for existing shareholders. Whereas dilution without capital growth would indicate that the business model is not working.

So whilst it's still impossible to value Animoca on a fundamental basis, we at least know some of the criteria that we can use to benchmark their performance over the next year.

The story is definitely very positive and alluring. So long as the business metrics augment the story, an investment in Animoca could continue to offer market beating returns for the next five years (irrespective of whether it lists or not).