The Company and what Is happening
P2Earn, Inc. is a publicly listed company on the Canadian stock exchange, Frankfurt Exchange, and the U.S. OTC. It was formed following the acquisition of the existing play-to-earn company, Jellyworks Inc, by a publicly listed vehicle. The company claims to be developing an online platform to integrate all of its gaming guild operations, including new member registrations, NFT allocation, game selections, and payouts.
Background: What is a gaming guild and how does P2Earn make money?
A play-to-earn gaming guild is a community of players who work together to maximize their earnings within a particular blockchain game. They do this by sharing information, strategies, and resources to help each other progress in the game and earn rewards that can be converted into real-world value, such as cryptocurrency or other digital assets.
In the company’s case, P2Earn supplies players with the necessary NFT assets or in-game currency to maximize their player’s ability to earn more assets. Any earnings made within the platform are then split equally between the player and the company. P2Earn manages all of the back-office work and financials, letting its member focus on playing the games.
P2Earn claims that it had generated positive earnings during the beta testing of its platform, with only a handful of beta testers over an eight-month period.
Source: P2Earn Investor’s Deck
Why does it matter, and why this stock has potential?
I did my research and looked at 30 other publicly listed companies that deal with Web3, blockchain technologies, and cryptocurrencies. So far, P2Earn is the only company focusing on building a comprehensive platform targeting blockchain gamers.
The play-to-earn market can potentially revolutionize the gaming industry by introducing digital identity, assets, and ownership into players' hands. This model allows gamers to farm or collect cryptocurrency and NFTs that can be sold on NFT markets such as OpenSea. It also embraces the idea of an open economy and financially rewards users who add value by playing and spending.
There are currently hundreds of play-to-earn video games that are now available to play and hundreds more in development or are now in beta testing. Major developers are also taking an interest in the play-to-earn business model as a way of expanding their products. A report published by Brandessence Market Research estimated that the global play-to-earn market could reach $65.7 billion by 2027. The value could potentially be much higher as the larger traditional online gaming market transitions to this new model.
Size and volume of NFT marketplaces
As per the 2021 NFT Market Report published by the blockchain data company Chainalysis, the Global NFT market has already surpassed $40 billion in value, signifying substantial growth in this industry.
One of the most popular NFT marketplaces is OpenSea, which is often referred to as the Amazon.com of NFTs. At its peak last year, the company had been valued at $13.3 billion, further highlighting the potential of NFTs as a rapidly growing market segment.
Stock Price and Expectations
The company currently has a market cap of around $5.7 million, with around 52 million shares out. Dilution is substantially low, and I think the company is significantly undervalued. In its corporate presentation, P2Earn claims that a large portion of its shares are owned by insiders and locked up. This means that those shares will be unable to go against the stock price any time soon, which if true, would mean that the stock will be hard to bring down in the short and medium term.
P2Earn’s platform does promise a lot of potential if we take into consideration their claimed revenue during their beta testing. With only just a few players, the company said it had already generated profits. I am speculating that a “few” maybe a couple of hundred players. Now scale that up to 1,000 or 10,000 players when the company fully launches its platform and we may be talking real money now.
The Bitcoin factor
One thing I noticed while doing my research on publicly listed companies that deal with blockchain technologies and cryptocurrencies is that the movement of their stock prices does coincide with the movement of prices of major cryptocurrencies. i.e. when bitcoin rallies so do their stock prices.
I believe that this will also be the case for P2Earn since they do have existing mining rigs and they directly deal with NFT assets, which are tied to cryptocurrencies. So this factor also needs to be considered. This also holds true for traditional stocks and even for major indexes.
Conclusion:
P2Earn believes that the wider market is now ready to invest in this kind of business model given the global adoption of online gaming, and I tend to agree with that assumption to some extent. It is the first ever company offering this type of online gaming platform to be listed on the public market and it is definitely a stock to look out for.
The larger video game market is moving in the direction of this new business model. Companies such as Square Enix are getting their feet wet in this space and I think more will follow. If this is indeed the case, then P2Earn is an excellent early bet.
With its low dilution, the promise of scalability, proven proof of concept, and relatively good point of entry, I would recommend this stock to anyone. Or for people to at least put this company on their watch list.
PXE Stock Rating: Strong Buy
DISCLAIMER
I’m not a certified financial planner/advisor, a certified financial analyst, an economist, a CPA, an accountant, or a lawyer. I’m not a finance professional through formal education. I am not responsible for any ramifications, financial or otherwise, that occur to you as a result of acting on the information found above.
Do your own research. Make your own decisions.
The majority of the data and information presented in my analysis were found on P2Earn’s website and their investor’s presentation.
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