Left Behind Games - An Unholy Valuation?

Left Behind Games is a small video game publisher (LFBG.OB) which went public in a reverse merger in February, 2006.  It has one asset, the exclusive license to the massively popular, Christian-themed, Left Behind book series, and its initial PC game will ship November 7.  So how would one value a start-up company with a possibly strong license, $12M in negative shareholder equity and no track record of delivering top-selling product?

Apparently, the public markets should value a company like this at an astonishing $128M!  That truly takes a holy man to understand, especially the 20% rise in the stock today.  Let's pretend the game sells 100K units or even 200K, which would constitute a good hit - that would give it $2.5-5M in revenue for 2007, valuing it at 25X Revenue, or 6 times higher than any other public game company.  Even more amusing is that the company just sold 3.8M shares in a private offering for $1.50 a share, yet the stock is now at $7.21, 2 weeks after it closed the offering.  And I forgot - there has never been a successful religious-themed video game.

So unless you consider this to be a donation, I would avoid this stock like the plague at current valuations.  It's possible Left Behind creates a monstrous hit like Mel Gibson did with the movie Passion of Christ, but it's about as likely as hitting the lottery at this price.

Comments

[Greg]

Hm... Well, yes that's a high valuation. But then, this is based on the NYT best-selling series of novels about life post-rapture that apparently every fundie nutcase, ah, I mean, God-fearing Christian in the country has read. I would not be at all surprised if 200k unit sales is low.

[SJR]

This statement is posted from an employee of Left Behind Games on behalf of Troy Lyndon, our Chief Executive Officer.

There has been in incredible amount of MISINFORMATION published in the media and in online blogs here and elsewhere.

Pacifist Christians and other groups are taking the game material out of context to support their own causes. There is NO “killing in the name of God” and NO “convert or die”. There are NO “negative portrayals of Muslims” and there are NO “points for killing”.

Please play the game demo for yourself (to at least level 5 of 40) to get an accurate perspective, or listen to what CREDIBLE unbiased experts are saying after reviewing the game at www.leftbehindgames.com/pages/controversy.com

Then, we’d love to hear your feedback as an informed player.

The reality is that we’re receiving reports everyday of how this game is positively affecting lives by all who play it.

Thank you for taking the time to be a responsible blogger.

[Sean Ryan]

In spite of the amusing comment from LBG games about "misinformation", the point still remains that the stock is now down to $1.22, which is probably where it should be. Unfortunately, no one could borrow shares for the obvious short. What is typical of small cap companies is that LBG issues an amazing number of press releases, including 4 in one week in December - this is another "Sign of the Apocalypse" from an investor point of view

[NYC]

Hey, with so many people having an opinion about this game, how many have actually played it? And what credibility do they have? Focus on the Family has publications which can set the record straight for everyone…at http://www.pluggedinonline.com/thisweekonly/a0002989.cfm.

[Jonathan Hutson]

Investors Give No Quarter to Convert-or-Die Videogame

When Left Behind Games launched its convert-or-die videogame Left Behind: Eternal Forces on November 7, 2006, its stock traded at a peak price of $7.44 per share. Breathless boosters at RedChip issued a "strong buy" recommendation and predicted that within 18 months, the stock would soar to as much as $18.70 per share. Really?

In fact, Left Behind Games' stock chart looks like a ski slope. Not a gentle bunny hill, but a World Cup grand slalom course, groomed for a world-beating downhill run. Today, you could buy a share of Left Behind Games for a quarter -- with change left over. On March 21, 2007, the stock closed at 18 cents a share.

READ ON: http://www.talk2action.org/story/2007/3/22/5223/74597

--
Jonathan Hutson