Podcast #35 - Gravity with Zippy Capital

We get some fantastic stock suggestions from our listeners and one that has popped up several times is a gaming company called Gravity. Gaming is not a sector we follow closely, so we’re pleased to have Zippy Capital (@zippy_capital) on this week’s podcast to share his insights about this fast-growing publisher of mobile games. Gravity is a South Korean gaming company, and are publishers of games based on the Ragnarok franchise, which is extremely popular in South East Asia. Zippy Capital publishes his analysis on Gravity and other investing topics on his substack and at Seeking Alpha.

• Gravity works with developers such as Dream Square, Tencent and Bytedance to develop games in exchange for distribution rights in the China market, while Gravity retains distribution rights in all other markets.
• The Ragnarok franchise has transcended its comic book roots and is part of South East Asia popular culture, with live concerts based around the games selling out in minutes.
• Gravity has had hit games in Ragnarok: Eternal Love and Ragnarok: Origin, with more on the way, and have recently announced a partnership with the NBA to launch an NBA based game in South East Asia.
• With a market cap of just under $1B and trading at 9x trailing EV/EBITDA, the potential upside is large given the increasing popularity of mobile games all over the world and especially in South East Asia, but mobile games have a relatively short shelf life and competition in this sector is very high.

The following companies are mentioned in this episode: Sea Limited (SE), Teladoc Health (TDOC), Tencent Holdings (TCEHY), Activision (ATVI), Take-Two Interactive (TTWO).

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