Nitro Games

Research note


Nitro Games: Smart money

Nitro Games announced a directed new issue of SEK 47.4 million at a subscription price of SEK 47.5 per share, a discount of approximately 7.7 percent from the weighted average price during the last 30 days of trading. The directed issue will result in a dilution of about 27.6 percent. Two of the largest new shareholders in the directed issue is Ludvig Strigeus and Ola Rollén, two of the brains behind the success of Spotify and Hexagon. A financially secured Nitro Games backed up with high-quality money made the stock surge 25-30 percent.

The largest new shareholders in the directed issue are Ludvig Strigeus, followed by OP-Finland Micro Cap Fund and Ola Rollén. Two of the largest existing shareholders, Swedbank Robur and Jacob Ehrnrooth also participated in the directed share issue. As we wrote in our latest research update a share issue was expected, we, however, did not estimate it would be this big. The capital raised will help the company in its commercial launch of the new game Heroes of Warland and give Nitro Games financial strength and flexibility in exploring new opportunities.

As we earlier have written, we believe Heroes of Warland has better long-term commercial potential than Nitro Games previous game Medals of War. In the highly competitive mobile games industry, a big marketing budget is almost always much needed, and the new money will, of course, increase the commercial potential for Heroes of Warland and hopefully the next game as well. We will however not change our valuation in our so-called base case of SEK 67 per share. A strong cash position in Nitro Games with great new shareholders is positive, but a dilution of 27.6 percent for existing shareholders is not.

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